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David Taylor (North-West Leicestershire) (Lab/Co-op): Does the Secretary of State agree with me that thousands of millions of tonnes of coal remain to be worked in the United Kingdom, perhaps via technologies that we do not yet fully understand? The next key stage in the process is a viable carbon capture and storage system, and we know that work is going on in that regard. If, by some mischance, the Conservatives returned to power in 2015 or beyond, they would have access to CCS. However, does the Secretary of State agree that it is unlikely that they would pursue that route, not least because the shadow Secretary of State has a constituency, in north-east Leicestershire, with almost 1,000 million tonnes of coal that remains to be worked? That looks a very juicy prospect to me, and it is about time that he moved into it.
Mr. Hutton: The option of using clean coal is one that we should keep, which is why we have taken the decisions that we have in relation to carbon capture readiness and CCS. The option of new clean coal technology would be effectively ruled out by the policies that we have heard recently from the hon. Member for Rutland and Melton.
I have described this Opposition policy as naive, which is not a word I would usually use, but on this occasion it is totally justifiable. However, I do not accept at all that the hon. Member for Rutland and Melton is naive. He has had a very substantial career in the oil industry. He and many of his colleagues cannot really believe in the approach that has just been put forward by the right hon. Member for Witney (Mr. Cameron). It must be the panderers who have come out on top again. The panderers used to be an endangered species, as we all remember, but sadly they now seem to be alive and well— [ Interruption. ] That was the joke, actually; it is not coming—it has been delivered. There are a lot of panderers in the Leader of the Opposition’s office, and a lot of wildlife organisations will welcome that, but I personally do not.
Dr. Iddon: I made the point in Committee that post-combustion capture of carbon is the most inefficient method, but that is the direction that the Government are taking. As a chemist, I know that pre-combustion capture allows us to generate chemicals, especially hydrogen. Why have we chosen post-combustion capture?
Mr. Hutton: We made that decision on advice, because it is the most globally relevant technology if one considers what is happening in India and China, where a gigawatt of new coal-fired capacity is being added every week. There is no doubt, given the reality of that sort of use of fossil fuel, that we need a technology capable of being applied to that type of power generation, and that is why we have chosen post-combustion carbon capture and storage. Other countries are exploring other technologies—for example, Norway is looking at a gas scheme, and the US is considering a project along the lines that my hon. Friend mentions.
Mr. Flello:
Does my right hon. Friend understand the great sadness felt by my constituents and others in north Staffordshire? They sit on vast reserves of coal, but the mines were closed in the 1980s by the party that now talks about what should have been done in the past in terms of investing for the future— [Interruption.] My
constituents are frustrated that those resources are there, but it appears that nothing will be done with them in the future.
Mr. Hutton: I do understand that. It is especially unbecoming for Conservative Members to barrack my hon. Friend when he makes a fair and valid point. They obviously do not like to be reminded of their record in government.
It is worthy of note that significant investment is now going into coal extraction, and that should be welcomed because it is a source of energy security for the UK. However, we must ensure that we use it in as clean a way as possible, and that is what we are trying to do.
My final point is about the action that we are taking on energy prices. Unprecedented global demand for fossil fuel has resulted, as we all know, in wholesale gas and electricity prices more than doubling since 2007. Producers and consumers have a mutual interest in avoiding high oil prices in the short term and a shared interest in decarbonising our economy over the long term. That is why, at the recent energy summit in Jeddah, we proposed that consuming nations open up their energy markets to new investment from oil producers—a sensible suggestion—so that oil-producing countries have a stake in the future of tomorrow’s energy technologies. In return, we need oil-producing nations to open the door to increased investment in expertise to exploit the full potential of the world’s oil supply in the short term.
Clearly, high oil prices impact disproportionately on the poor, so we must continue to make the eradication of fuel poverty a priority for action. Since 1996, more than 4 million households have been lifted out of fuel poverty. Since 2000, £20 billion has been spent on fuel poverty benefits and programmes. When it comes to fuel poverty, therefore, we will take no lessons from the party that, as we all remember, imposed VAT on gas and electricity bills. One of the first things that we did when we came to office in 1997 was cut VAT on fuel bills, helping millions of consumers in the process. I do not dispute that we can and should look to do more, and we will make further proposals in due course.
Mr. Peter Bone (Wellingborough) (Con): I have listened carefully to the Secretary of State’s long speech, but he has not mentioned the failure of the European Union to liberalise its energy market. Is he going to say a few words about that?
Mr. Hutton: We have made progress in that regard. The hon. Gentleman will be aware of the recent outcome of the Energy Council, which my hon. Friend the Minister for Energy attended and where he did a very good job for the UK. We have made progress, but we have not got everything we wanted. We also have a two-year review, so we can take another look in two years. It is not true to say that nothing has been done.
As I said, we are focused on ensuring that the UK has the most resilient energy system that it can through a diverse low-carbon energy mix. That demands nothing less than a revolution in our energy systems both at home and abroad. We must move away from the old carbon-intensive economy of the first industrial revolution and embrace the new low-carbon technologies of the next industrial revolution. This is the right time to
accelerate our progress towards that end, securing not just our long-term national interests but a new generation of green-collar jobs in the British economy. That is why I am pleased to announce today that the companies shortlisted from the pre-qualification stage of our carbon capture and storage demonstration competition have been announced. I am also publishing proposals today that will help us to develop the right regulatory framework to make carbon storage a reality and to explore what carbon capture-ready means for new power stations. Copies of both documents are available in the Library.
The criticisms of the Government that we have heard today are misplaced. They are nothing less than opposition for opposition’s sake. The Opposition’s policies would not help to steer our country through the difficult times ahead but would instead make matters worse. As I said earlier, the hon. Member for Rutland and Melton has not set out a coherent alternative because he has none to offer. I urge all my right hon. and hon. Friends to reject the Opposition motion tonight and to support the amendment in the name of my right hon. Friend the Prime Minister.
5.45 pm
Martin Horwood (Cheltenham) (LD): We welcome the opportunity for this debate. It is timely given the state of the international energy markets, the state of our constituents’ fuel bills and, of course, the publication last week of the Government’s renewable energy strategy consultation. We will support the motion because it contains much that is right, but it also has some weaknesses that I shall consider in my remarks.
The motion is right at least to mention fuel poverty, although I think the subject could have been highlighted rather more. It is absolutely essential that we ensure there is a fundamental shift in the way that energy companies’ tariffs work in this country, if necessary through changing the remit of Ofgem, so that we can guarantee the lowest tariffs for the poorest customers, so that price spikes deliver benefits to poor customers as well as the energy companies, and so that we can ensure that energy efficiency measures are prioritised for the least well-off customers first. I am sure that the Conservatives’ response to fuel poverty and the specific policies, rather than the rhetoric, will emerge during the course of the debate, but I might have missed them during the speech made by the hon. Member for Rutland and Melton (Alan Duncan).
The motion is also right to highlight the problem of the potential energy gap. We are indulging in an important national debate about how we deliver a sufficient, affordable, reliable and sustainable energy supply for this country. I am surprised that, although it is about the threat to energy security, the motion is rather silent on the potentially greater threat of climate change. That might be because there is an emerging split among those on the Conservative Benches about some of the issues relating to climate change. That was evident in Committee on the Climate Change Bill last week, when the right hon. Member for Suffolk, Coastal (Mr. Gummer) and others led a rebellion against their Front-Bench team on whether the Bill should include a reduction of 80 per cent. in carbon emissions by 2050. The Conservative rebels supported Liberal Democrats and Labour Back Benchers, while
the Conservative Front Benchers sat on their hands on that vital issue. I can therefore understand why Conservative Front Benchers might not be highlighting the climate change dimension to this debate.
David T.C. Davies: It always puzzles me how people from the hon. Gentleman’s party can talk about an 80 per cent. cut in carbon dioxide emissions when they are not willing to support the measures, such as nuclear power, that alone can deliver that.
Martin Horwood: I shall come to explain how we would do that in the course of my remarks. The hon. Gentleman should just be patient.
The motion is also right to highlight the UK’s renewable energy potential, which was estimated by the Renewable Energy Association at some 14 to 18 times the current level of electricity sales in the UK. The hon. Member for Rutland and Melton said that 1997, when Labour took over from his Government, was such a long time ago that renewables hardly existed then. Nevertheless, for a full six years the Liberal Democrat policy had been to increase the renewables proportion of energy generated to 20 per cent. I think our original target was to do that by 2005. The fact that we spotted the potential so much earlier than other parties is regrettable. It is nice to say, “I told you so,” but our job would be much easier now if anyone had listened to the Liberal Democrats and the green movement in those days. The Secretary of State was rather dismissive of Liberal Democrat policies, but the Government do come around to them, albeit 20 years later.
The motion rightly mentions the potential of wind and tidal energy, and highlights the issue of the marine renewables deployment fund. It is quite wrong that such a high proportion of the money—£42 million of the £50 million in the fund—will go to technologies that are already commercial. We are thereby missing the opportunity to develop and support pre-commercial technologies. In contrast, the Scottish Ministers’ wave and tidal energy support scheme specifically includes pre-commercial technologies, and so it has supported important developments such as the European Marine Energy Centre in Orkney, which already funds nine projects. That is in stark contrast to the performance of the MRDF, which, as the motion points out, has yet to fund a single project.
Supporting pre-commercial technologies would enable us to make progress on issues such as the Severn barrage. I support the exploration of the technology that the Government are undertaking, but things are made more difficult by the fact that there are no demonstration projects up and running, or even planned, for alternative scenarios that might have a lesser environmental impact, such as the creation of tidal lagoons. An MRDF that considered pre-commercial technologies might be able to fund a lagoon demonstration project, and therefore make an important contribution to exploiting the enormously important Severn estuary, and other renewable resources, with minimal environmental damage.
Robert Key (Salisbury) (Con):
I entirely agree that we should consider tidal flow energy and lagoons—options that the Government are avoiding. They are sleepwalking towards the construction of a Severn barrage, an absurdity that will be bitterly opposed. There is very little evidence
that it will be cost-effective. The Government should stop behaving as though there will be no opposition to the Severn barrage. The Minister for Energy made a big mistake in rubbishing what the Royal Society for the Protection of Birds said on the subject recently. I hope that the Government will learn better ways in future. The barrage would have a devastating, irreversible impact on the whole Severn estuary.
Martin Horwood: I am grateful to the hon. Gentleman for his intervention, and he is right to highlight the real environmental concerns of the RSPB and bodies such as the Wildfowl and Wetlands Trust. However, it is a little premature to say that there is no economic case for a barrage until we have seen the progress made in the Government’s review. I would support the Government continuing with the process that they are undertaking on the Severn estuary and considering all the possible options. I simply seek to make that a more productive exercise by suggesting that they look at how the MRDF is used.
Oddly, the motion omits to mention a range of renewable technologies, including solar, photovoltaic, solar thermal, geothermal and biomass. I would have thought that friends and colleagues of the hon. Member for Rutland and Melton from the National Farmers Union would lobby him hard to make that a priority. Nor is there mention of hydroelectric, micro-hydro—a potential new addition to hydroelectric power in this country—or even the much maligned biofuels. I believe that biofuels have potential. That is not a very trendy thing to say, because many people are highlighting the real risks that they pose to the rain forests, land use and food prices, and highlight the fact that in north America biofuels are being produced that have, if anything, a negative impact on global warming. I welcome the Government’s commitment to strict sustainability criteria in the document published last week. It is therefore strange that they are ploughing ahead with the renewable transport fuel obligation without putting those strict sustainability criteria in place.
The motion also omits clean coal technology, which has been mentioned by various hon. Members. That is regrettable, especially as the Conservatives have shared our criticism of the Government’s carbon capture and storage regime, which has been too lax on new coal-fired power stations such as that at Kingsnorth, refuses to accept any kind of locking-in of carbon capture technology, and is too unambitious in its limited post-combustion competition for a demonstration project on carbon capture and storage.
I was slightly surprised to hear the hon. Member for Rutland and Melton say that he supports an emissions performance standard for new power stations, although that is in line with comments made by the right hon. Member for Witney (Mr. Cameron). During proceedings on the Energy Bill, the hon. Member for Wealden (Charles Hendry), who is now sitting on the Conservative Front Bench, opposed our amendment to introduce precisely such a system, saying:
“Although I am sympathetic to and understand what Governor Schwarzenegger has achieved in California, my concern about the new clause is that it would introduce too many uncertainties into people’s investment decisions” ——[Official Report, Energy Public Bill Committee, 26 February 2008; c. 221.]
The Conservatives do not seem to have all their ducks in a row when it comes to clean technology.
Most notably of all, the motion is silent on energy efficiency, with the sole exception of a passing reference to smart meters. Energy efficiency is, of course, the most cost-effective path to energy security that we can take, and it is vital that energy efficiency is a major part of our energy strategy. We should all be aware of the risk of the lights going out. It is worrying that in the coming decades we simultaneously face perhaps up to 20 GW of generating capacity coming to an end and a rising dependence on imported oil. We have been a net importer of oil since 2006, and a net importer of gas since 2004. The context worldwide is that there is 252 years’-worth of coal left, but perhaps only 72 years’-worth of gas and 45 years-worth of oil. There is also a dramatic increase in demand, as a result of the relentless growth of new economies such as that of China.
I confess to having been sceptical of the alarming scenarios painted by some green movement members who have talked about peak oil, but I am a complete convert; peak oil seems to have been reached, and we face very serious economic as well as environmental consequences. A worrying scenario is set out in the Stern report, which mentions some historically successful ways of reducing carbon emissions. The most successful reduction of all was achieved by Russia after 1989, but it came about essentially through economic collapse. I hope that that is not the scenario the Government are aiming for—a scenario in which we walk blindfolded towards the edge of a cliff. I suppose that that would be the Northern Rock approach to ensuring housing affordability.
It is sobering that although we face an oil price of $140 a barrel—Goldman Sachs and Morgan Stanley say it is not inconceivable that it will shortly be as high as $200—consumption is still rising. Disruption to supply was recently experienced in Nigeria, and is still possible in many other parts of the world. Speculation appears to be adding to the problem; people are betting on the prices getting higher in future. There also seems to be a greater lack of reserves and of flexibility in world markets now, and the combination of all those factors is potentially economically devastating. Similar factors are influencing European gas markets, especially as state-owned oil and gas monopolies are very influential, in terms of the link between gas and oil prices.
The more reliant we are on imported fossil fuels, the more risky the picture looks, especially when we consider where the energy comes from. The oil comes from notoriously unstable regimes such as Iraq and Nigeria. We have a huge reliance on Saudi Arabia; although it is, in some senses, stable at the moment, it is nevertheless a monarchical dictatorship that relies on repression to maintain its political situation. In the long term, therefore, it cannot be regarded as a very stable source. Supplies of oil go through some very narrow choke-points, such as the Suez canal and the strait of Hormuz, and we have some very vulnerable installations. I was alarmed to read in the New Scientist only recently that the Ras Tanura oil terminal in the Persian gulf handles fully one tenth of the entire world’s oil supply. Those are very vulnerable and risky pieces of critical infrastructure. I come from Gloucestershire, where we are very much aware of the need not to put all of one’s energy supply eggs in one basket: last summer, we nearly lost our electricity supply altogether as a result of relying too heavily on one single power supply station.
The solution has been staring us in the face for generations. It is not, as some Conservative councillors in the south downs have suggested, to start drilling for more oil on the south downs. It is not nuclear; there is no example anywhere in the world of a nuclear power station being built without public subsidy, and it would leave a poisonous legacy to future generations. The previous generation of nuclear power stations still cost us some £1.5 billion per annum in clean-up costs, and an eventual long-term storage repository has not been found, even for first-generation nuclear waste. The location of such a repository is unknown, its price cannot be calculated, and it would be a cause of concern for thousands of years. Clean coal technology is part of the solution, but only as a transitional technology. The long-term answer is renewable energy in all its various forms.
Mr. Jamie Reed: The hon. Gentleman mentioned radioactive waste and the issues associated with its storage and ultimate disposal. How does he propose that the nation should manage funds, find a location, and finally get rid of responsibility for the storage carbon?
Martin Horwood: The hon. Gentleman makes an interesting point, and there are parallels between the long-term storage of carbon and of radioactive waste, which is why it is a priority to develop carbon capture. We should think carefully about storage, and the use of CO2 to feed anaerobic digestion or create biomass might be a more a sustainable and, in the long term, safer way of using some of the carbon that is captured. We must all work together to find solutions to the problem that the nuclear industry left from the last generation of nuclear power stations. I am simply urging that we do not repeat that mistake.
We have talked about various sources of renewable energy, so I shall not repeat what was said, except to say that we have enormous potential. The more diverse and decentralised our energy supply, the more resilient and safe it will be. We are supported in that view by the Government’s own advisers. The Government sometimes listen to some advisers and not others, but a 2006 Sustainable Development Commission report on the role of nuclear power in a low-carbon economy—I am sure the Minister knows this quote very well—said:
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