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4.55 pm
The Secretary of State for Energy and Climate Change (Edward Miliband): I beg to move an amendment, to leave out from 'House' to end and add:
"notes that around 20 gigawatts of new power generation is either under construction or has been consented to; believes that during a time of historically low temperatures and the highest ever gas demand in recent days, the country's energy infrastructure has shown resilience; further notes the increase in gas import capacity by 500 per cent. in the last decade, and the increase in the diversity of sources of gas, including liquefied natural gas and gas imports through interconnectors with Norway and continental Europe; commends the Planning Act 2008, which has created the circumstances for greater onshore gas storage as well as for new nuclear power stations and other low carbon energy infrastructure, and the Energy Act 2008 which has created the circumstances for greater offshore gas storage; backs the development of the grid to make it ready for a low-carbon energy mix; supports the Government's
drive towards greater energy efficiency in homes through programmes such as Warm Front, the Carbon Emissions Reductions Target and Community Energy Savings Programme, all of which contribute to fighting fuel poverty, and in businesses through programmes such as the forthcoming Carbon Reduction Commitment Energy Efficiency Schemes; commends the Government's wider plans to embark on the Great British Refurb, where up to seven million homes will have whole house makeovers by 2020; and further supports an approach based on strategic government and dynamic markets that maintains the country's energy security as well as developing more diverse energy supplies, including clean coal, renewable and nuclear energy.".
The speech made by the hon. Member for Tunbridge Wells (Greg Clark) is a curious speech to follow. One is normally tempted to say that the Opposition offer easy answers, but on the central issues that he complained about, he offered no answers. If ever we needed confirmation that it is up to those on the Labour Benches to answer the difficult questions that Britain faces, the hon. Gentleman's speech was an example of that.
I want to start by thanking the people who have played such an important role in protecting our energy supplies during the longest spell of cold weather for 30 years. I thank the operators and engineers of the national grid, the people working in the oil and gas fields of the North sea and the people who have gone out to repair power lines in the most inclement conditions for their work. They are the people who keep the lights on in this country and guarantee security of supply. We all owe them a debt of gratitude.
In the gas system, the cold weather produced record demand on consecutive days last week, with demand at 468 million cubic metres-a figure that is far higher than the previous record. The surge in demand came alongside four major losses of supply from Norwegian fields as a result of the very cold weather there. It is worth saying that, despite some of the statements that the hon. Member for Tunbridge Wells was making last week, apart from a short period last week when there were restrictions for a small number of companies that had discounted gas as part of interruptible contracts, the gas supply has been operating for households and businesses as it would on any day of the year. We need to keep monitoring the situation as the winter progresses and we always keep the system under review-it is very important that the Government do that-but the system has shown resilience despite the strain of cold weather and supply loss.
Why has the system shown such resilience over the past 10 days or so? One of the reasons is the action taken by this Government in the last four years, since the fire that occurred at the Rough storage facility in 2005-06, which the hon. Gentleman mentioned. On peak days last week, we were able to serve almost a third of our demand-142 million cubic metres out of a total demand of 468 million-through new sources of supply that simply did not exist four or five years ago. Those include the Langeled pipeline from Norway, the BBL pipeline from the Netherlands, and the South Hook and Dragon liquefied natural gas terminals at Milford Haven. That did not happen by accident. It was our agreement with Norway in 2005 that made the pipelines possible. The work that was done with Qatar and the investors in Milford Haven-billions of pounds of investment was provided-made possible the LNG terminals, and it was the willingness to ensure an open market in the UK that made those investments possible.
Those things could happen only because of the proactive role of Government in enabling the new facilities. The chief executive of National Grid, Steve Holliday, said last week that
"we've seen the benefits of the investment of the last five years where the UK can now import 30 per cent. of its gas internationally that it couldn't five years ago".
So the central claim that the hon. Gentleman has been making-at least in the television studios, when they have invited him on-which is that this Government have not acted is, of course, nonsense. I welcome the tone that he employed today much more than I welcome the tone that he uses in the television studios. I hope that he learns something from the experience of the past few weeks. Playing politics with energy security does no good to anyone, and it is exactly the kind of tactic that turns people off politics.
Dr. Andrew Murrison (Westbury) (Con): I wonder what a constituent who wrote to me a couple of days ago would say in response to the Secretary of State's remarks. My constituent said that he was a major employer in our part of the county and was facing a critical situation with regard to maintaining production through having an interrupted gas supply. He was faced with a huge daily cost through having to switch to oil to maintain energy and heating to the plant, and he said that that was not sustainable for such a business. How many businesses, compared with businesses in France or Germany, for example, were having the sort of interrupted supply that my constituent describes?
Edward Miliband: The hon. Gentleman asks a serious question about a business in his constituency. Obviously we want to limit the number of interruptions to businesses, although it is worth saying that the businesses that have chosen to take interruptible contracts have been getting prices on average 5 to 10 per cent. lower as a result.
I would like to make a slightly technical point about the kind of interruptible contracts deployed last week. The point is not about the amount of gas in the system; it is about the pipe network. National Grid has said that when the pipe network reaches a certain level, a deal is made with those companies under which they get discounted gas. In exchange, however, during peak times and when there are exceptional circumstances, such as the recent cold weather and supply outage, their contracts will be interrupted. We want as few businesses as possible to be interrupted, and I am glad that the business that the hon. Gentleman mentioned had a back-up. There are no interruptions this week, so far, which is positive news.
Mr. Gummer: The right hon. Gentleman rightly warns us against playing politics with energy security, but would he not agree that his Government played politics with it for 10 years? They produced an energy policy in which they specifically removed every single date by which things would be done, except for one that was 50 years away, which meant that nobody involved would be around to see whether what they said should happen did happen. Is it not true that for 10 years the Government have failed to step up to the decisions that had to be made?
Edward Miliband: The right hon. Gentleman, about whom I made admiring remarks last week-I slightly regret it now-is known for being beyond partisan politics, at least most of the time, so I do not think that those comments become him. I do not know what he means by 50 years' time. We have set clear targets, at least on low carbon emissions, for much sooner than in 50 years' time, and we are clear about our energy policy, as I shall explain.
I want to say something else that is important in setting the context for this debate. People are hard-pressed at the moment, including on gas and electricity bills. In a sense, however, this is a comparative debate with the rest of Europe, so it is worth saying that gas prices here are the lowest in Europe, as they have been for domestic customers for the past five years. That says something about the nature of our system. It does not mean that it is not capable of improvement. All systems are capable of improvement, and we should always learn lessons. However, it is important to make this point, particularly when people talk about prices spiking and so on: according to the most recent figures, we have the lowest prices in Europe.
Miss Anne Begg (Aberdeen, South) (Lab): Perhaps some of the Opposition's misunderstanding comes from the wording in their own motion, which refers to the
"ongoing depletion of North Sea oil and gas".
They should tell that to the Norwegians, who have in place interconnectors supplying us with gas, as the Secretary of State said. I can assure the House that there are as many known reserves in the UK bit of the North sea as there were in the 1970s. The reference to depletion suggests the ending of North sea gas, but that is some way down the line. In north-east Scotland, we fight that all the time, because people seem to think that there is no longer oil and gas in the North sea. There is, there is a lot of it and it is important that it remains part of our energy mix.
Edward Miliband: I am pleased that my hon. Friend intervened, because she takes me to the right part of my speech. Let me add that I enjoyed the offshore oil and gas industry reception last night that she hosted.
It is important to ask what a strategy for gas involves in this country. It involves three things. Maximising production from our indigenous supplies is very important. The North sea still supplies about 50 per cent. of our gas supplies. That is why we took the action that we did in the Budget and pre-Budget report-my right hon. Friend the Chancellor was a great advocate for this-to provide new tax allowances to support the development of particularly challenging oil and gas fields in the North sea. We did that to maximise production in the North sea. That is very important. My hon. Friend the Member for Aberdeen, South (Miss Begg) was right to say that we must not write off the North sea. It is home to a very important industry, and one that will remain important for years to come.
Richard Ottaway (Croydon, South) (Con): The Secretary of State just said that the UK is currently experiencing the lowest gas prices in Europe. I am sure that he does not want to play politics with that claim, but I suspect that he is talking about wholesale gas prices. When does he expect those prices to be passed on to consumers?
Edward Miliband: We want price reductions to be passed on to consumers as quickly as possible. That is important, and I have made that clear on numerous occasions. However, I think that I am right in saying-I shall check back on this-that the figures that I quoted are reflected in both wholesale and retail prices.
Mr. Ellwood: It does not matter where the gas comes from-whether it is through the Langeled pipeline or from the North sea-as long as we get it. The question that I would pose to the Secretary of State is as follows. The Government have rightly introduced targets to reduce CO2 emissions, but if we are to achieve them by 2030 or 2050, we will need to start carbon capture and storage for gas. May I therefore invite him to ensure that the legislation that is going through the House which deals with carbon capture and storage for coal gives the option to consider demonstration projects for gas as well? It seems a waste of time to delay that now. Let us catch up, get ahead and ensure that gas is included.
Edward Miliband: We will look at all proposals, but what is the constraint? The constraint is that we are spending up to £9.5 billion on carbon capture and storage from the levy, which will come from consumers around the country. We think that the priority lies in having four coal-fired demonstration projects, but the hon. Gentleman wants to tax more and to spend more from the levy. My hon. Friend the Minister of State will obviously look at any proposals in Committee.
Charles Hendry (Wealden) (Con): When the Secretary of State says that the Government will look at all proposals, is he aware that his fellow Minister voted the proposal down with her colleagues in Committee yesterday?
Edward Miliband: Obviously my hon. Friend looked at the proposal and thought that it was not a good one.
As well as the North sea, we need import capacity, which is up by 500 per cent. in the past decade. It is important to say that import capacity now stands at 125 per cent. of the total UK demand for gas-that is, it is greater. That capacity comes from the Netherlands, Norway, Germany, Algeria, Australia, Egypt, Qatar, and Trinidad and Tobago. Why is that list of countries important? It is important because it emphasises the importance of diversity, which is key when it comes to security of supply. To further increase import capacity, the South Hook facility-an extraordinary facility that I urge people to visit, as I have, for its opening-is doubling capacity this quarter. We are also exploring additional pipeline capacity with other countries, which is important.
Let me turn to storage, which the hon. Member for Tunbridge Wells spent a lot of time talking about. The question is not whether we need more storage in the years ahead; the question is how we get it. What was most disappointing about his speech was that, as far as I could tell, he had no proposals on storage. He complained for most of his speech about what he saw as the lack of storage, but he had no suggestions for how we should get that storage. Let me provide my suggestions for how we need to get more storage in this country.
First, we have the national policy statement on gas infrastructure. One thing that has bedevilled the building of more gas storage is the planning process, which is an
obstacle to more storage. We established an offshore consents regime under the Energy Act 2008, but the new Infrastructure Planning Commission is also important, not just in relation to gas storage, but more generally. As the Opposition are, today at least, in the mood for seeking consensus, let me say that they should get on and support the Infrastructure Planning Commission's work. Business is saying loudly and clearly that it seems odd that a party aspiring to government should be saying, "We're going to overhaul the planning regime," when we finally have a good planning regime in place.
I know that the hon. Gentleman is not in charge of the policy, but I hope that, having listened to this debate, he will go and talk to the shadow Secretary of State for Communities and Local Government, the hon. Member for Meriden (Mrs. Spelman), and say that he has discovered the spirit of not playing party politics on such questions and so should she. She should accept the planning regime that we are proposing, because it is clearly the right way forward and will speed up the building of energy infrastructure in this country.
Ms Celia Barlow (Hove) (Lab): I thank my right hon. Friend for taking my intervention. Had the hon. Member for Tunbridge Wells (Greg Clark) taken my intervention, I would have asked him whether his party's opposition to the Planning Act 2008 is damaging not only the possibility of storage for gas, but numerous renewable projects that his party claims to support, one of which, on a small scale, is in Brighton and Hove, where the Tory council voted against wind turbines on its own building.
Edward Miliband: The council obviously has not followed the example of the Leader of the Opposition. My hon. Friend is completely right. Most right-thinking people in the House think that the planning situation generally has been one of the big problems concerning energy infrastructure. We finally have a planning regime that commands support, and it would be far better if the Opposition saw the error of their ways and started to support it.
Mr. Ben Wallace (Lancaster and Wyre) (Con): In my constituency, a large planning application for underground gas storage facilities has been made by a company called Canatxx. The proposal area borders the constituency of the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble). Both the Labour-controlled county council and the Secretary of State have turned down the application, and it is now being resubmitted because of the changes to planning legislation that the Secretary of State has mentioned. The application was turned down on the grounds of safety and failures in relation to geology. The Secretary of State wants the Conservative party to engage fully in the reform of planning, but will he confirm that such bodies should not overrule fears about safety or geology in the interests of, perhaps, small lobbying companies such as Canatxx has become?
Edward Miliband: I shall not get into individual planning applications, but I know that the IPC rightly takes safety issues seriously.
Mrs. Humble:
The hon. Member for Lancaster and Wyre (Mr. Wallace) and I have worked very closely on this matter, which is of serious concern to all our
constituents. I recall having a debate on the new planning regulations, and there is still a key role for listening to the voice of the community. In many ways, the new planning guidance strengthens the voice of the community. I want that voice to be heard in relation to the planning application that Canatxx has put forward again, against the wishes of everyone in the locality.
Edward Miliband: I am sure that my hon. Friend forms a formidable duo with the hon. Member for Lancaster and Wyre (Mr. Wallace). She makes an important point. One thing that I find curious about the Opposition's proposals on planning is that they say that the Government should set the planning statement and that the Secretary of State should continue to exercise judgment about specific applications. I think it would be better for my hon. Friend's and the hon. Gentleman's constituents if those decisions were taken independently, so that the people who put forward the overall plans on gas storage were not also making the individual judgments. I maintain that the planning reforms that I have talked about are important.
Let me say one more thing about gas. I think that the hon. Member for Tunbridge Wells has found that there are no easy answers to this issue. The difficulty is finding a balance between the role of the market and role of the state in ensuring security of supply. After last year's winter, we considered, along with Ofgem and the National Grid, whether the balance was right and whether more needed to be done on how the market worked. That led to two changes, the first of which was in the information that is available to the market to ensure that suppliers understand the short-term supply-and-demand situation and the availability of gas from storage. The second change was an increase in the effective penalties on shippers who fail to deliver gas that they are contracted to provide.
We continue to consider whether more needs to be done on the operation of the market, and it is right that we do that. The hon. Member for Tunbridge Wells did not necessarily refer to this point, but it was probably implicit in his speech, and it is even more important given that two thirds of the world's gas suppliers are in Russia and the middle east. It is important to note that that is not the case for our gas suppliers; that is why our diversity is so important. It was because of our interest in these issues that we asked my right hon. Friend the Member for Croydon, North (Malcolm Wicks) to produce his important report on international energy security, to which we will respond before the general election. I think that the most important conclusion from that report was about the strength that we get from the diversity of our energy sources. That is a strategy that he pursued very successfully as Minister for Energy. It has borne fruit and we continue to pursue it. As part of the road map to 2050 that we are preparing, we are considering whether more needs to be done. His report emphasised the importance of long-term contracts, which are more common on the continent, as well as a variety of other issues.
It is also worth citing what my right hon. Friend said in his report about the notion of strategic storage, which some people have put forward, effectively suggesting that the Government should build their own storage:
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