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Business without Debate
Pharmaceutical labelling (warning of cognitive function impairment) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 13 March.
Broadcasting (Television licence fee abolition) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 27 March.
Sovereignty of Parliament (european communities) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 24 April.
European Union (audit of benefits and costs of UK membership) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 27 March.
Drugs (Roadside Testing) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 24 April.
Peak Oil
Motion made, and Question proposed, That this House do now adjourn. —(Helen Goodman.)
2.31 pm
Barry Gardiner (Brent, North) (Lab): The stone age did not end because of a lack of stone, and the oil age will end long before the world runs out of oil. In fact, the oil age is clearly already coming to a close, and three things have precipitated that. First, we have either just arrived at, or, as is more likely, just passed peak oil—the point on the Hubbard curve at which the maximum rate of global production has been reached. Secondly, and directly related to that, is the challenge of climate change and the need to stabilise average global temperatures to no more than a 2° celsias rise. Although the report produced by the Intergovernmental Panel on Climate Change in 2007 equated that with a concentration of 450 parts per million of CO2 equivalent in the atmosphere, more recent research from our own Hadley centre and NASA’s Goddard institute suggests that that might be over-optimistic. That has led the European Commission, in its January communiqué on a post-2012 framework for the spring Environment Ministers Council, to suggest that a 350 ppm CO2 equivalent stabilisation target might be better.
The third factor is political risk. This is what some people call security of supply, but it is effectively the political risk to which Governments are so acutely sensitive, owing to the fact that they are unable to control a resource that is essential to their economy functioning well. Energy is the lifeblood of the economic body, and the moment it stops flowing is the point at which the economic body begins to die. Perhaps the most striking example of the effect of the convergence of those three factors came earlier this week, when Stephen Tindale, a former head of Greenpeace, announced his conversion to the need for a new generation of nuclear energy plants in the UK.
I should make it clear that I am not in any way suggesting that the world is about to run out of oil. The International Energy Agency would suggest that there are enough proven and probable reserves of conventional oil left to supply the world with oil for a further 40 years at current levels of consumption. That is about 2.4 trillion barrels over and above the 1.1 trillion barrels that the world has produced so far. Beyond that, it makes sense to account for new discoveries of fields as yet unknown and for oil sands and oil shales, along with coal to liquids and gas to liquids, which, combined with extra-heavy oil, could account for a further 9 trillion barrels, although at significantly increased production costs, ranging from $50 to $115 a barrel.
None the less, the IEA outlook predicts annual production decline from now on, at a rate of 6.7 per cent. It is important to realise that there are significant limiting factors apart from price. We do not seem to be discovering significant new fields quickly enough. Data on existing reserves are suspect, particularly in the middle east, and depletion rates may be more rapid than some Governments are prepared to admit. Unconventional resources such as ocean floor or Arctic oil shales are proving technically more difficult as well as more expensive to develop.
The oil-producing countries are less willing to export as they increase their own domestic consumption. I think it was King Abdullah of Saudi Arabia who said in 2006 of some newly discovered field:
“Leave it in the ground, Inshallah our children will need it”.
On the one hand, King Abdullah was absolutely right. As global supply is projected to fall from 80 million to 40 million barrels a day by 2030, while global demand is projected to rise to 104 million barrels a day, the shortfall of 64 million barrels is the equivalent of finding six new Saudi Arabias. No doubt in such an scenario, an oilfield or two in the cupboard might prove very profitable for the lucky children. On the other hand, King Abdullah’s children will need these resources like a hole in the head, as their release is the equivalent of injecting an extra 13 gigatonnes of greenhouse gas emissions a year into the atmosphere in 2030—at a time when to stay within our stabilisation targets, we should be achieving a 17-gigatonne-a-year abatement instead. That abatement would be required simply to achieve our 450 ppm target. The 350 ppm target would require reductions far in excess of that level.
Oil, of course, is comparatively benign in comparison with coal, and the increase in coal generation is perhaps the single most acute threat that we can predict with some certainty. It is calculated that more than a third of the total 45 per cent. expansion in world energy demands by 2030 will be supplied by coal. Unless carbon capture and storage can be put in place for all new coal-fired power stations within the next five to eight years, that expansion of coal alone would make it highly unlikely that we could prevent dangerous climate change.
The Minister knows as well as I do that the current state of CCS technology and the reluctance to invest in it make this potential sequestration route about as reliable as a derivatives banker in a bull market. In her response, I ask my hon. Friend to outline the current time scale on which UK CCS might be rolled out, according to her Department’s best estimates.
Because of the very different rates of emissions that different fuels produce per unit of electricity, I ask my hon. Friend to establish a carbon priority in UK energy policy that would give precedence to lower-carbon fuels and back that up with an appropriate structure of incentives and penalties. I understand the transport premium that oil commands, but she knows that in electricity generation, the ratio between coal, oil and gas is that for every 10 emissions from coal, there are seven from oil and only five from gas. Surely it cannot be right for Government policy to take account only of the financial costs of these different generating methods, and ignore the environmental costs.
Naturally, I am amazed that significant further investment of Government resources is not being put into the very lowest carbon and renewable technologies. The Government’s stated position is that they will not in any way subsidise the new generation of nuclear facilities that this country so desperately needs over the next 15 years simply to replace older stations coming offstream at the end of their production line. That shows a level of complacency that would have qualified any Minister for a seat on the board of RBS over the past few years.
To meet the UK’s increasing energy demands, we need not simply to replace existing power stations, but to install many more new ones. The Government rightly,
but not yet adequately, incentivise renewable technologies such as wind and marine power. It is illogical to refuse to do the same for nuclear. That must change. I look forward to hearing my hon. Friend’s response on that particular point.
No Member would expect me to speak about energy and climate change without mentioning the essential role that trees and forestry can play in leading the world out of the environmental problems that it faces. Those who are familiar with the McKinsey global abatement cost curve will know that it has identified an abatement potential of 19 GT. What is extraordinary is that of that total, which includes insulation, technological efficiencies, carbon capture and storage and literally hundreds of other components, forest mitigation alone accounts for a massive 6 GT. Most of that forest mitigation comes at a very attractive average price, lower than €15 per tonne. All the forest-based opportunities will have to be taken if the world is to reach even its 450 ppm target.
The Government have a wood fuel strategy for England. I know that because I was the Minister who produced it. However, it is one thing to have a strategy and quite another to have a programme. The Minister will be aware that the biomass currently available in under-managed broadleaf and conifer woodlands in England is respectively 2.7 and 1.5 million tonnes. If even half that available biomass were incorporated in a wood fuel programme, it would save the United Kingdom the equivalent of 3.6 million barrels of crude oil every year.
According to the Government’s own cost-benefit analysis, a pump-priming investment of approximately £120 million—million, not billion—over eight years would show a return of approximately £70 million in carbon benefit during that initial pump-priming period. Thereafter, the benefits over costs would grow to an estimated £35 million each year in savings to the economy. Those figures relate to just half the biomass that we know to be currently available. They do not include the potential for plantation of new woodlands managed for biomass, or even the potential of using sawmill co-product. Significantly, they do not even include what is known as “arboricultural arisings”—the wood that comes from tree pruning and safety operations by highways authorities, 68 per cent. of which currently goes to landfill.
Given those added sources of biomass, in less than 10 years Britain could have a wood fuel industry that saved it hundreds of millions of pounds and approximately 10 million barrels of crude oil each and every year. That would also improve the biodiversity of much of the woodland in the country. If used strategically, it could also create migration corridors allowing species to adapt to the climate change that is already in the system, as well as a wonderful human resource of rest and relaxation. I ask my hon. Friend to ensure that the Department starts turning that strategy into a programme as soon as possible.
My intention in recommending a move from a global to a small-scale national programme is to make one essential point. Just as the enormous scale of the global challenge that faces us is not unitary, with peak oil, climate change, population growth to 9 billion by 2050 all combining to create the problems of unsustainability, the nature of the responses that we put into effect must not be unitary. The creation of my hon. Friend’s Department was a welcome step forward in Government, bringing together old adversaries from the Department
of Trade and Industry and the Department for Environment, Food and Rural Affairs and cementing them into allies, but in my view it failed to identify the real focus of the problem that we need to tackle.
The Department is called “Energy and Climate Change”, and my hon. Friend lost her old title of Minister for biodiversity when she was transferred to it. It would have been far better for her to bring it with her. The real crisis is one of biodiversity and ecosystems failure, not of climate change. Let me emphasise that, in and of itself, climate change would not matter. The real problem is that biodiversity cannot keep pace with the rate of change, and as a result biodiversity is depleted and ecosystems break down. It is the loss of biodiversity, along with the loss of the ecosystem services that it provides, that represents the real threat to human well-being.
The economics of biodiversity and ecosystems is a new and difficult enterprise for politicians. We are struggling to identify the true nature of value as we broaden the concept of capital to include not just social capital and human capital, but natural capital. Today, most of the benefits provided to our civilisation by ecosystem services bypass the marketplace, escaping the pricing mechanism, and they are therefore lost to the political and economic process as a mere externality. This inability to capture the value of ecosystem services is the acutest market failure in our world today.
My hon. Friend the Minister would perhaps laugh if I told her that I had put off upgrading my mobile phone for the past 16 months because a little girl was stung by a jellyfish on a beach in Devon in 2007. However, it is the growing demand for the latest mobile phone that has made coltan so valuable. Mining for this resource has fuelled the conflict in the Democratic Republic of Congo and central Africa. That conflict has led to deforestation. This has seen the loss of habitat and a reduction of forest mammals. That has resulted in an increased demand for an alternative animal protein. That has seen the depletion of high-trophic fish stocks. That has resulted in fishing down the food chain. That has led to blooms of jellyfish, which have replaced fish as the dominant planktivores. And that has resulted in the beaches of south-west England being invaded by jellyfish.
If climate change teaches us anything, it is that we are interconnected, but our institutional structures have not yet begun to recognise that. Governments around the globe still have mechanisms of intervention and engagement that are segregated and compartmentalised. We have a Department for the environment and a separate Department for international development, when it is clear that it is impossible to achieve the millennium development goals without securing the ecosystem services that provide the poorest 1.4 billion people on this planet with 50 per cent. of their GDP. We have a Treasury that understands over-leveraging of companies and credit bubbles, but that cannot see a connection with a world population consuming resources that the planet takes one year and four months to renew or replace, and a Treasury that refuses to put a value on ecosystem services and sees value only in the context of financial markets.
I urge my hon. Friend to work across Government silos, to reconnect with her old title as biodiversity Minister and to stop our institutional structures limiting
our responses to global problems. We need to stop thinking in fragments and break down the barriers that prevent us from arriving at comprehensive solutions. Planting woods for biofuel is in every way as important a signal that her Department is rising to this challenge as it is a positive contribution to abatement and tackling the problems of peak oil.
2.48 pm
The Parliamentary Under-Secretary of State for Energy and Climate Change (Joan Ruddock): I congratulate my hon. Friend the Member for Brent, North (Barry Gardiner) on what was an absolutely fascinating speech. It was wide-ranging, and I can say both that I agree very much with what he said about biodiversity and that my thinking does cross all Departments. I believe that the Government are beginning to accept the imperative of looking at biodiversity and ecosystem services and that value is being placed on them. Perhaps I should also add that I, too, have resisted having a new mobile phone, and for similar reasons—although my phone is now becoming so poor that I have managed to miss a few messages from the Whips Office, so I suspect it will have to be replaced.
The objective of our Government energy policy is to deliver affordable, secure and clean energy to UK businesses and consumers. In order to ensure security of supply now and into the future, the Department of Energy and Climate Change monitors potential risks to supply. Clearly, one potential threat to UK energy security is that the global supply of oil is not sufficient to meet future demand. There is a wide range of views as to why oil supplies may become insufficient, including geological constraints, insufficient investment, political instability and resource nationalism.
Typically, the risk that oil supplies will run out due to geological constraints is characterised as peak oil. To monitor this risk, DECC looks at a wide range of academic and industry studies that analyse future world oil supplies. DECC also meets experts to discuss this and other oil market issues, including investment in and exploitation of new oil reserves. However, assessing peak oil is extremely complicated due to limited data and the importance of assumptions made about future developments in the energy sector. Consequently, risk assessments vary widely by source. We look at the different sources, but we do not estimate the timing of peak oil production ourselves. We realise that a number of factors influence the balance of supply and demand of crude oil, and that these are not limited to the amount of available recoverable conventional oil resources. They also include the global demand for oil in the future, access to and investment in the development of existing resources, and technological progress that may allow us to extract more oil from current sources.
My hon. Friend quoted the International Energy Agency and he is correct, in that its most recent report states that
“the immediate risk to supply is not one of a lack of global resources, but rather a lack of investment where it is needed”.
The IEA estimates that only about a third of all ultimately recoverable conventional and economically recoverable oil has actually been produced to date. The report also states that
“there are reserves to meet demand at least through to 2030 if the investment is there”.
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