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This is based on a detailed analysis of, among other things, 580 of the world’s largest oil fields, but the IEA also recognises—again, as my hon. Friend has said—that decline rates in maturing fields will increase, and that large investments are needed to make up the decline at existing fields. It estimates that total investment of $6.3 trillion might be needed on oil supply infrastructure between 2007 and 2030. Thus the IEA takes the view that it is not the level of oil reserves but of investment in production that is the more serious risk to future oil supplies.
Like the IEA, the Government have always recognised that additional investment will be required to meet oil demand in the future, and that the challenge lies in bringing these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy. We recognise that having oil reserves is only a start, and that converting these reserves into a global energy supply is fraught with challenges.
We are aware of the increased need to reduce barriers to timely and adequate investment in the oil sector. Having recognised those barriers, the Government used the London energy meeting in December as an opportunity for consumer and producer nations to discuss these issues. In particular, the transparency of global oil markets, the need for investments in production and the impacts of the financial crisis on future energy supply were discussed. At the meeting, participants emphasised the importance of stable and transparent investment regimes and agreed to work collaboratively to reduce barriers to investment. Participants also discussed the potential for innovative technologies to enable more efficient and effective use of energy resources. So we are not complacent about energy security.
The Prime Minister has asked my right hon. Friend the Member for Croydon, North (Malcolm Wicks) to review international energy security, and he may wish to include within his review consideration of supply and demand in the oil markets. Secondly, we are already putting in place policies that will reduce the energy intensity of the UK economy and help to increase its resilience to shocks in energy supplies. It is a fact that the UK is one of the least energy intensive countries in the G7.
My hon. Friend raised with me, quite properly, the threat of climate change from continuing use of fossil fuels, so let me address alternative technologies and energy efficiency. Tackling climate change and ensuring a secure supply of affordable energy are the key goals of our energy policy. Increasing our use of renewable energy is an essential part of our strategy for meeting those goals.
The UK’s policies on climate change, our incentives for the development of renewable energy and our policies for moving to a low-carbon economy are consistent with the need to diversify our energy sources and ultimately increase our resilience to shocks in energy supplies. The Department of Energy and Climate Change will publish a new UK renewable energy strategy later this year, and it will set out the path to meet the UK’s share of the EU renewables 2020 target.
The heat and energy saving strategy consultation, published on 12 February, sets out the Government’s long-term vision for dramatically improving the energy efficiency of our homes and businesses and expanding
the provision of low-carbon heat. The measures set out in the consultation could reduce oil consumption in 2020 by 6 per cent.
We already have a raft of incentives and constraints in place to tackle the move to a low-carbon economy. We have the EU emissions trading scheme, we are introducing the carbon reduction commitment and we have the renewables obligation certificates and, of course, the feed-in tariffs. They will all increase our potential to employ renewable energy.
Barry Gardiner: On the issue of ROCs, has my hon. Friend had the opportunity to consider the disparity between the five ROCs for marine renewables that the Scottish Administration have and the two that we have in England? Has she considered our urgent need to put more investment into marine renewables, as it is one of Britain’s leading renewables sectors?
Joan Ruddock: I thank my hon. Friend for that important question, on which I regret that I am not briefed. As it falls outside my immediate portfolio, I shall have to take advice and I undertake to write to him on that point.
Let me turn for a moment to transport, which is the biggest consumer of oil in the UK economy, accounting for about 70 per cent. of total oil consumption. The Government are therefore working towards improving efficiency in the transport sector and within the 2020 EU package to achieve a target of 10 per cent. renewable transport fuels by 2020. The Government are also keen to promote the uptake of new technologies when they arrive and, as part of the recent announcements on transport strategy, we made a commitment of £250 million to deliver consumer incentives to promote electric vehicles.
My hon. Friend asked in particular about carbon capture and storage. The timetable is that we expect to have a demonstration project operational by 2014 and that we want to see commercially viable CCS in this country by 2020. Indeed, a European programme will assist with that. We are also considering additional policies that will take us from demonstration to deployment.
My hon. Friend asked about wood fuel and whether the strategy has become a programme. First, let me congratulate him on the development of the wood fuel strategy, which is an incredibly important part of our move from the most energy-intensive uses of energy. Much work is going on around government and I hope that in due course he will be satisfied that we have moved from strategies to programmes.
On my hon. Friend’s point about nuclear, I think that he is very aware, as he suggested, that the legislation has been designed and passed in such a way that it does not create a Government subsidy for the industry. That has obviously been done because the Government believe that the industry will progress and that it will do so on a commercial basis. Of course, that is the assurance that the companies have given over time.
My hon. Friend spoke of the difficulties of exploiting more difficult oil fields, and the Government and industry are pursuing initiatives to stimulate North sea investment and activity. We are also working to ensure that there is a stable regulatory framework that helps market participants to have the confidence to make necessary investments in the UK continental shelf.
We know that additional investment will be required in all elements of energy policy to meet demand and to ensure that the lights stay on in this country, but we have to move from a high-carbon economy to a low-carbon economy. The Climate Change Act 2008 gives us the framework we need, with its target of an 80 per cent. reduction in greenhouse gas emissions by 2050, consistent with the science whereby developed countries such as ours have to make that effort, if we are to remain within
the 2° Celsius limit for temperature increase. I recognise that, even as we continue to exploit our oil reserves, we must prepare for decarbonisation of our energy supply and our homes and make progress in transport. The challenge is huge, but we believe that we have the frameworks and will have the policies we need to tackle it effectively.
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