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The second problem with regard to wind is that Britain will still require considerable conventional electricity generating back-up, as wind fluctuations mean that
turbines often have spells when they produce little electricity. "Peak demand" means exactly what it says. It is no good telling industry to wait until the wind picks up. International business waits for no man and will soon go elsewhere if we fail to deliver on time.
Is back-up a real problem? Mr. Paul Golby, chief executive of E.ON UK, has stated that we should require conventional back-up capable of producing 90 per cent. of wind turbine capacity. What is the point of that? It is like having 10 subs on the subs' bench, all of equal ability to the players on the pitch. Very few football teams can afford to do that-
Mr. Binley Except Chelsea; the Secretary of State is absolutely right. It can afford to do so because it is so flush with Russian oil money that it is untrue. A good example!
We face another problem: the closure of much of the current electricity generating capacity over the next 10 to 15 years. Most of our nuclear power stations, and half our coal-fired power stations, are due to be decommissioned, thanks to the EU's large combustion power directive, which is about controlling emissions. Consequently, we will not have the resources to provide adequate, conventional back-up capacity, despite the Government's welcome acceptance of the need for nuclear power and the onset of new gas-fired capacity. The required back-up just will not be there, and that makes nonsense of the Government's reliance on wind turbines for such a sizeable proportion of the nation's energy requirement.
Why not allocate more resources to nuclear power? The simple but disturbing answer is that that would not be permitted under the EU's 2008 renewable energy directive, wherein Britain has agreed to meet 15 per cent. of its energy consumption from renewable sources by 2020. We could have fought our corner, and battled against the nonsense, but perhaps the Government hoped that the previous Prime Minister would become President of the EU, and so did not want to rock the boat. Who knows what the reason is? The Government certainly did not fight the issue. In fact, many experts now tell them that on the question of wind power, they have got it wrong.
Martin Horwood: Will the hon. Gentleman join the Liberal Democrats in supporting a European super-grid, which could connect this country to Scandinavian hydro power, for instance? That would be an extremely flexible back-up in the case of any intermittency that he might find in wind power, and it is entirely clean and renewable. Of course, it would require a certain amount of European co-ordination, with which he might not be entirely comfortable .
Mr. Binley: The Front-Bench spokesman for the Liberals consistently tries to take every opportunity to thrust his party's policy down our throat, but I have a better alternative, and I will tell him what it is in a minute.
We have made a commitment to increase our renewables share massively, with the consequence that, with the exception of Malta and Luxembourg, we are faced with the toughest target in the whole EU. One wonders what Malta and Luxembourg have done to deserve that. It
gets worse: Britain is likely to carry a disproportionate cost of meeting the EU's 2020 renewables target. Indeed, Pöyry Energy Consulting has estimated that the UK will carry between 20 and 25 per cent. of the total EU cost of meeting a Europe-wide renewables target. That works out at between £150 and £200 per household per year.
To sum up, we probably will not be able to build the target number of wind turbines; in any case, they would not produce the energy required, and even without the much-needed back-up capacity, they would cost us all a great deal of money. No wonder industry and commerce are concerned. The lights could go out, and Britain's energy prices will be higher and less competitive. Industry and commerce will find it harder to sell their goods and services abroad.
What should we do? First, we must not shy away from fossil fuels, but should concentrate on making them carbon-free. Secondly, we must invest in the long-term development of nuclear fusion. I am delighted that the Secretary of State for Energy and Climate Change has found such enthusiasm for clean coal, because I genuinely think that it is a real alternative. My concern, however, is that we are not moving quickly enough. That is the general thrust of my argument. I plead with him to find ways of moving on the whole clean coal agenda more quickly. He has a problem with wind turbines-there is no doubt about that-and we need to find a sensible replacement, which is sitting underneath our feet, and will fulfil 300 years of energy need, provided that we can create the technology in time to make it viable.
That is where I want to end. I have a great deal of respect for the way in which the Secretary of State has changed the whole focus of our energy policy, and I believe that he is committed, as I said earlier, to the concept of clean coal. I simply urge him to put more effort, energy and resources-perhaps by shifting some of the resource that has gone into fashionable wind turbines-into developing clean coal more quickly. The payback for Britain will be considerably greater, and it is one way-just one way-in which we might escape the lights going out.
9.11 pm
Mr. Mike Weir (Angus) (SNP): Many hon. Members have expressed sympathy for the people of Cumbria in the recent floods, and I associate myself with that. However, may I also point out that other areas have been affected, not least the south-west of Scotland, which just shows that the effects of climate change do not respect boundaries? Indeed, I saw on "Reporting Scotland" the other night that the constituency office of the hon. Member for Dumfries and Galloway (Mr. Brown) was flooded.
The most important issue facing the Department of Energy and Climate Change is the Copenhagen summit and the need to reach agreement. I have to confess that I have become increasingly concerned about the outcome, especially if a deal is not made or if the issue is fudged at a future summit. That may well be the political reality, but I fear that there is a serious risk of a sense of hopelessness taking root in the face of climate change. I was interested to note that the recent HSBC climate confidence monitor reported not that people did not believe in climate change but that a significant percentage
did not believe that there was anything that we could do about it. If that attitude becomes more prevalent, it points to serious difficulties ahead.
We have spent many years, however, telling people that we need to make a deal at Copenhagen. If world leaders suddenly decide that it is not urgent and that it can wait for another year, what sort of message does that send out to the peoples of the world? However it is dressed up, it will be a serious setback for acceptance of the need for strong action to tackle climate change. The Secretary of State for Energy and Climate Change rightly pointed out that we need to discuss the costs of climate change-and, I would add, we must take the opportunity to do so. Out in the country, there is very little appreciation of what an 80 per cent. reduction in emissions means, so there is a huge need for education, because it will have a serious impact on our economy and way of life. I am convinced that most people do not understand the full impact.
On other aspects of the Energy Bill and how they relate to the low-carbon economy, I fully support the Bill's aims of tackling fuel poverty and creating funding for carbon capture and storage. It makes positive moves towards helping people in fuel poverty, including the mandatory introduction of social tariffs, which have long been argued for. Yet again, one group of fuel-poor have been omitted-those who are not on the gas mains and who rely for heating either on liquefied petroleum gas or on heating oil. I, and many other hon. Members who represent rural constituencies, have long argued for action on that. An inquiry by the Office of Fair Trading unfortunately did not produce a positive outcome, but it is a serious issue. There is a great deal of fuel poverty in rural areas, and we need to find a solution. I urge Ministers to look at it again, to see whether we can come up with something to help that group.
As I pointed out in an intervention, although there is provision for information to be passed on, a data-sharing project is still in its early stages. I was interested in what the Secretary of State said about introducing regulations in the next week, and I look forward to seeing them.
I welcome the provisions in the Bill to amend the powers of Ofgem. I have had many vigorous discussions with it in my years in the House on many aspects of its work. I am particularly pleased to see that at long last competition will not be its sole guiding light. In reaching its decisions, Ofgem must take into account both security of supply and climate change. From my experience, I suspect that to put this into practice will require a significant change of culture at Ofgem. I hope Ministers will push for that at the earliest opportunity. The current culture is amply illustrated by reported attempts by Ofgem in effect to undermine proposals for a feed-in tariff. I look forward to debating those issues in Committee.
As an MP for the north-east of Scotland, I want to say something about the oil and gas industry, which is very important to my area. Ministers will be aware that the Select Committee on Energy and Climate Change recently produced a report which brought out some interesting issues on the future of that industry. We are clearly in a state of transition as we work towards a low-carbon economy. The existence of oil and gas off our shores puts us in an enviable position in some respects as we have a cushion during that transition, but
it also presents us with a huge challenge. So many people are employed in the oil and gas sector that we need to manage that transition carefully and ensure that the skills developed in the North sea are retained and transferred to new jobs in the new economy. We are presented with the challenge of turning carbon jobs into green jobs.
For the foreseeable future, as has been said by others, fossil fuels will still play a considerable part in our economy. We note in our report that more than 30 billion barrels of oil equivalent have been produced over the past 40 years and a considerable amount remains in the North sea. Witnesses said that between 11 billion and 37 billion barrels remain, which is a significant amount of oil, whichever figure one takes.
Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): Cash transferred to London-
Mr. Weir: Indeed. Exactly how much oil is recoverable will depend on a number of factors, not least the world price of oil.
Mr. MacNeil: Will my hon. Friend give way?
Mr. Weir: I am sorry. Time is short.
Setting the fiscal regime will be extremely important. The oil industry is very concerned about what may come out in the pre-Budget report. It urged Ministers to argue with their colleagues in the Treasury that we need a proper regime to ensure that we get the development of the area west of Shetland, where new thinking may well be necessary if development is to go ahead on a major scale.
It became clear in the course of our report that there are serious concerns also about finance for the North sea, a point that I made in an intervention. The big companies will always get finance-it is not a problem for the likes of Shell or BP-but many of those working in the North sea are much smaller companies operating in smaller fields. Many of them are experiencing difficulty with finance, even from our state-run banks.
We were told in the course of our investigation that of the major UK banks, only Lloyds HBOS, or whatever it now calls itself, operates in the North sea. It became clear that the bank was lending only to existing customers and was not prepared to lend to new entrants into the market. That is a serious barrier to exploiting the riches of the North sea.
A further important point concerns the infrastructure. Much of it is ageing-it has been there a long time-and decommissioning is an issue. That may create a great deal of work, but there is also the problem of the use of that infrastructure if we are to make carbon capture and storage work. As well as getting it working in the coal stations onshore, we have to find a way of storing captured gas. The obvious place for storage is the depleted oil and gas fields and the aquifers under the North sea. To do that, we have to retain the existing structure to enable us to pump the gas out to the North sea. We must have a fiscal regime that allows the companies that are no longer using much of that structure for its original purpose to maintain it to ensure that it is available for carbon capture and storage. Again, I urge Ministers to make that important point to their Treasury colleagues.
The Energy Bill includes much about carbon capture and storage, and Ministers have told us today that we are world leaders in it. I have talked many times in this House about the Peterhead project. It would have given us world leadership in CCS, but, because of this Government's typical dithering, we lost it, and it is no longer true to say that we are world leaders in CCS. Ministers talked about the potential to export it to developing countries, and that may well be true, but the Library has produced an interesting note on CCS. It considers what is happening in other countries and states that China has one of the world's few commercial CCS operations, at Huaneng Beijing co-generation power plant. China is, in fact, ahead of us in many ways, and, unless we move quickly and get CCS working, rather than exporting technology to developing countries, we may have to buy it in.
We have heard a lot about people who complain about wind farms. My good friend the hon. Member for Northampton, South (Mr. Binley) talked about that, and there are difficulties with many such sources, so we cannot assume that there will not be difficulties with CCS. A few months ago, I, along with other members of the all-party offshore oil and gas industry group, visited a CCS project run by Total in Pau, southern France. All over the surrounding countryside, there were large signs protesting against the development of CCS in that area, so that is something else to worry about and another reason to move fast, to get the work under way and to ensure that we have CCS. Only with that will we be able to develop our coal resources, create jobs by linking coal with existing North sea infrastructure and ensure that we have clean energy and do not need to rely on the disaster that is nuclear power.
9.22 pm
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): It is a privilege to participate in what has been a popular and very interesting debate. I begin by trying to strike a note of empathy and understanding with the Government Front Benchers, because the past 12 years have, indeed, thrown up a complex, dynamic and changing energy scenario to which Ministers, policy makers and regulators have had to respond. At times, the challenges have appeared extremely difficult, and the UK faces a number of specific and profound tests.
In an excellent speech, the former Minister, the right hon. Member for Croydon, North (Malcolm Wicks), described very well one of the biggest shifts in the past 12 years. He explained how the UK has moved from being largely self-sufficient in energy to being increasingly reliant on imports. I shall not rehearse all the data to which he referred, but he described them very well. I shall, instead, draw the House's attention to the change in the gas situation, because the move to import reliance has been very pronounced, and this year the UK will probably rely on imported sources for about 30 per cent. of its gas requirements. The UK relies on imported sources for about two thirds of its domestic coal requirement.
Linked to increased import reliance is, of course, energy security, and in this country that issue has received more attention in recent years than at any time since the pre-North sea oil days. The right hon. Gentleman's speech typified how, for some, energy security has a strong geopolitical dimension: it is about Russian pipelines
and the stability of fuel supplies from the Gulf region. However, I urge caution on that paradigm. The former Minister described imported gas from Norway as good, democratic, human rights gas. He did not describe what imports from Russia or Qatar would be, but the House understood the implication. I urge caution on automatically regarding as inherently unstable energy imported from any country other than a stable western European democracy.
The House should not forget that during the deepest, darkest days of the cold war, when millions of troops and missiles faced each other across central Europe, the USSR still supplied gas for central and western Europe. In fact, Russia, formerly as the Soviet Union, has proved itself to be an extremely stable supplier of gas, notwithstanding the recent dispute with Ukraine, which has more to do with internal politics going back to pre-Soviet Union days than with Russia's wider approach to using its domestic energy resources for geopolitical gain.
Much more immediately, energy security is about the resilience of the UK's downstream infrastructure. It is about the vulnerability that was highlighted in 2000, and at intervals since then, in supplies of refined products as a result of blockades or industrial action at oil refineries, leading to panic buying and shortages of petrol and diesel on forecourts. It is about the resilience of the supply network in the face of events such as the explosion at the Buncefield depot, although the supply network coped very well with that disastrous event. More fundamentally, it is about human error and technical failure. Keeping the lights on is as much about bringing new capacity on stream in a timely way as it is about geopolitical developments. Of course, energy security is also about how well the internal EU gas market functions. Recent cold winters have demonstrated that it does not currently function in a way that is particularly helpful for the UK. The Government should be disappointed that they have not achieved more in encouraging European counterparts to move forward faster with liberalising the gas markets.
The most profound shift that has occurred during the past 12 years in the lifetime of these recent Labour Governments has been the emergence of the climate change agenda-a game-changing issue-and the rise of the imperative to reduce the growth of, and if possible reverse, the amount of carbon emissions into the atmosphere. That has been a major shift in the backdrop against which Ministers have had to frame policy. I empathise with and understand the challenges that Ministers have been up against, which include dealing with the drivers of energy policy, market efficiency, security of supply, climate change, and fuel poverty. Those elements do not always hang easily together, and sometimes they conflict, so coherent policy making in this environment is no easy task. However, there my sympathy with Ministers ends. As my hon. Friend the Member for Tunbridge Wells (Greg Clark) said, some of the changes that we have been discussing were entirely predictable; indeed, they were predicted many years ago.
A more purposeful and courageous Government could have made much more progress on these issues during the past 12 years. During that period, what was required was stable, coherent policy making, strong departmental leadership, and clear and predictable signals going to the marketplace and to industry. What have we had
instead? We have had 15 Energy Ministers averaging a span of nine months each in office. We have had two White Papers and a huge number of consultations and reviews. We have had departmental changes, with the alphabet soup of DTI, DBERR and DECC. We have had spectacular policy U-turns, most fundamentally on new nuclear build and on whether new coal-fired power stations should be given the go-ahead without being carbon capture ready. The past 12 years have been wasted, characterised by delays, policy confusion, and the lack of courage of a Government who have at times talked the talk, with good language about the need for diversity of energy supplies and the need for a strong domestic production component.
The fruit of those 12 years of dithering and confusion is that we are becoming more reliant than ever on imported natural gas. In his excellent speech, the former energy Minister, the right hon. Member for Croydon, North, warned about over-reliance on gas. Can he not see, however, that everything that has happened in the past 12 years-the delays, U-turns and policy confusion-has helped to bring about and exacerbate that situation? I remember a debate that we had last year on a similar set of issues in which he described energy security as
"an increasingly important aspect of national security."
"relaxed about the national security implications"
of growing reliance on imports and that
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