The Chairman: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant documents to the Committee?

As no one does, I call the Minister to make an opening statement.

The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): I am sure that we will have an interesting debate under your expert chairmanship, Ms Walley. We are dealing with a substantial volume of paper, but what is covered is important and, in parts, interesting.

The European Commission tabled its first strategic energy review in January 2007, which set out four objectives: a competitive, integrated energy market; security of energy supply; reduction of greenhouse gas emissions; and a common international energy policy. Those objectives are very much in line with the UK’s objectives, and we welcomed the move to taking a more joined-up approach to EU energy policy. Heads of Government and the European Parliament have subsequently endorsed that approach. Since then, the Commission has made a number of proposals to implement the commitments, including the third package of measures to liberalise EU energy markets, which is being negotiated with the European Parliament at the moment, and an integrated package of proposals for action on climate change, which was agreed at the end of last year.

The measures proposed in the European Commission document, “Second Strategic Energy Review”, mark the next step, with a focus on energy security. That reflects the growing concern of probably all member states, but certainly Germany and some eastern European states, about the EU’s energy security in the face of increased import dependence and the need to reduce greenhouse gases while maintaining the EU’s economic competitiveness. The document’s publication in November was particularly timely given the recent Russia-Ukraine gas dispute, which has particularly concerned countries such as Germany. The dispute has focused member states’ minds and has created greater consensus and momentum. As the Commission has pointed out, even when current policies are implemented, the EU will depend, for the foreseeable future, on imported oil, coal and, especially, gas.

We are here to debate two elements in particular of the strategic energy review package: the overarching communication and the Green Paper on European energy networks, although the accompanying documents are also relevant. I shall not go into detail about the two specific documents now, but highlight a few points. As a whole, the UK Government welcomed the strategic energy review package, particularly its focus on energy security. It represents a wide agenda, and its priorities are broadly in line with the UK’s approach to increasing energy security. In that context, we strongly support the drive towards greater diversification of Europe’s energy supplies and increasing the resilience of our energy networks while moving towards better functioning energy markets across the EU. At the same time, we must continue to reduce our energy consumption and to increase our use of cleaner fuels and technologies.

The focus must be on ensuring that the proposals are developed and implemented as soon as possible. Another disruption to EU supplies is a credible risk, and we should be prepared. A fortnight ago, my right hon. Friend the Secretary of State, urged fellow Ministers at the Energy Council to do just that, and further decisions will be taken at the spring European Council later this month.

Meanwhile, we need to continue to take action at home. In order to improve the UK’s resilience, the Energy Act 2008 and the Planning Act 2008 will facilitate new investment in gas storage and import facilities through reforms to the way in which the planning and consents regulatory framework operates. We have also published a robust emergency plan. In addition, we are taking action to reduce gas demand through energy efficiency measures and increased levels of renewable energy.

Last September, the Prime Minister announced the home energy savings programme, under which energy companies will invest nearly £1 billion in making homes more energy-efficient. Only last month, we launched a wide-ranging consultation on a new heat and energy saving strategy, which sets out our short, medium and long-term ambitions for dramatically reducing emissions from the UK’s homes and buildings, as well as reducing fuel bills. We want the UK to pioneer and promote green energy industries, which will improve our energy security and reduce our dependence on polluting fuels.

Following our consultation on renewable energy last year, we shall publish a renewable energy strategy before the summer. We estimate that achieving our 2020 renewables target will lead to a 10 per cent. reduction in fossil fuel consumption.

On carbon capture and storage, the UK is one of the first countries to have introduced legislation to regulate carbon dioxide storage. We remain committed to a commercial-scale CCS demonstration operational by 2014. UK policy is to have a diverse mix and supply of fuels, which is the key to maintaining our energy security. Meanwhile, we have created the Office for Nuclear Development to give industry and investors a single point of contact for interacting with the Government. One year on from the publication of the nuclear White Paper, we are making good progress with the facilitative actions set out in that White Paper and are seeking significant industry interest in investing in the UK nuclear market. Indeed, I addressed a meeting of supply chain businesses earlier this morning in Derby.

In mid-2009, we will publish our policies and proposals to meet our carbon budgets. That will pull together Government efforts across the board to drive emissions down and to provide secure, sustainable and affordable energy supply. Policies on transport, planning and homes will make a crucial contribution to our domestic effort.

Before moving on to questions, I would like to address one of the concerns raised by the European Scrutiny Committee in its analysis. As the Committee notes, there have been a lot of energy-related initiatives recently at EU level, reflecting the growing importance of energy policy, as well as the growing energy interdependence of member states. At the same time, it is important that Europe’s policies are consistent and can be understood by businesses and citizens. In that context, the strategic energy review is to be welcomed. It presents a coherent message from the Commission—always welcome—and sets out a clear plan of action in the short and longer term. In implementing it, the Government will continue to push for a joined-up, evidence-based approach. In the view of Her Majesty’s Government, those are laudable aims. I urge all members of the Committee to support the motion in due course.

The Chairman: Should we need it, we now have until 5.30 pm for questions. Hon. Members should catch my eye to ask questions.

Charles Hendry (Wealden) (Con): May I pick the Minister up on his last point? The European Scrutiny Committee, in its covering note, says that

The Minister has generally welcomed the document, but what is his response to those specific concerns? As part of the process, moving forward, does the European Commission have a role in monitoring development towards targets such as the 2020 one on renewables?

Mr. O'Brien: I certainly think that the strategic European energy review being undertaken by the Commission is welcome, because it seeks to do precisely what concerned the hon. Gentleman. There has been a large array of documents, and we now need to do to bring them together in a coherent view of energy security and the future of energy policy across Europe. We need to do that in the context of recognising the importance of subsidiarity and making sure that countries can frame their own energy policy, while also recognising that we have a lot of shared interests, such as the Russia-Ukraine incident. We hope that that has remedied itself, but there are still issues. There is always going to be a risk that that incident, or something similar, will recur. Therefore, it is important that we have a view about how energy is addressed across Europe, what areas are appropriate for subsidiarity and what areas are appropriate for the Commission to have a clear view about and for countries to co-operate and help each other with. That is why this process is part of the developing general view that will bring together that plethora of different documents and strategies that have come out over a number of years from the Commission. What we are seeing now is a level of urgency about energy policy that we have not seen for perhaps a decade.

On the 2020 point, the Commission certainly should set a target. We have agreed to that target. The Commission will want to ensure that, across Europe, we are all addressing our responsibilities and so it will monitor that process. The extent to which it will interfere with that process remains to be seen. However, as far as we are concerned, we have no problem with the Commission monitoring our delivery of the targets and certainly by 2020 it will want to ensure that we have delivered on them. Frankly, we also want to ensure that we deliver on them.

Charles Hendry: May I push the Minister a bit further on that issue? He talks about the need to agree where the competence lies. Should we not be agreeing where the competence lies before we put in place a binding commitment to deliver something? Is it his view that it is the Government who will be responsible for delivering that 2020 target on renewables? Does he think that the European Commission will be able to come in and say, “You need to go faster, you must do this”, or does he think that that will be entirely left up to member states to decide? Finally, what is his understanding of what the fines and punishments will be at the end of the process for countries that do not meet the targets?

Mr. O'Brien: As far as the EU monitoring goes, there is a difference between monitoring and enforcing. The EU is really a club where member states have agreed that they will abide by certain agreed policies and strategies. We know that some member states tend to comply with that agreement more effectively than others. Some are just somewhat slow in responding; some are willing, but events intervene. So it is always right that the Commission should monitor and engage with member states, to ensure that they can respond to the agreed policies that the EU members have arrived at. I have no problem with the EU doing that.

As far as the delivery of those strategies is concerned, it is a matter of the member states having agreed those strategies. Their credibility is at stake. We certainly take the view that we want to see all the members of the EU delivering on the targets that they have agreed to. After all, we know that this issue of global warming is not just one for Europe; it is one for the globe, literally. For our own better environment, therefore, we need to ensure that we have European partners who deliver and so we want the European Commission to be monitoring that process.

What we expect is that, broadly, we will inform the European Commission about the way that we are developing our strategy to hit those targets. By and large, there is a level of subsidiarity about the extent and the way in which European countries will carry out the process of delivery themselves. There will be a variety of ways in which they do it, depending on their particular economic and energy circumstances. I think that that is the way that it would be best done and, as far as I am aware, that is the way that we propose to proceed with this.

Martin Horwood (Cheltenham) (LD): May I say, Ms Walley, what a pleasure it is to serve under you for the second time today? We spent many happy hours in the Environmental Audit Committee and I am sure that that will be repeated.

My first question is also about the constitutional context that we find ourselves in. I am interested in the interrelationship between this European energy strategy and a potential treaty at EU level. I remember a discussion in the Chamber last year in which I think Conservative amendments tried to take energy out of the list of European competences in the proposed treaty. Some of us argued strongly that it should remain in the list for precisely the reasons we have discussed today. What is the Minister’s take on whether the treaty was an essential prerequisite for an effective European energy strategy? If it was, how are we now proceeding without it? Are we limited by the lack of a treaty or are we—

The Chairman: I remind Members that we need direct questions at this stage in the proceedings.

Martin Horwood: How does the Minister see the constitutional context?

My second question is about the long-term—

The Chairman: Order. We will have a reply to the first question, and if it is brief I will come back to you for your second question.