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"Any decision to proceed with strategic storage would risk displacing investment in commercial storage, as commercial players would see the existence of strategic storage, which they would suspect might be accessed simply in response to high prices...as undermining their investment case."
What is good about my right hon. Friend's report is that it shows that there are no easy answers in this area, while charting a way forward for the Government. We will respond to his report, and over the coming months to Ofgem's project discovery work, including any recommendations, alongside the 2050 road map in the spring.
Let me deal with electricity, which the hon. Member for Tunbridge Wells mentioned in his speech. Diversity is very important here. About 18 GW of power supplies will go out of commission towards the end of this decade, while 20 GW are under construction or have planning permission. It is interesting to note that when E.ON made its decision to delay the Kingsnorth coal-fired power station, it cited the fact that there was not the expected demand in the system.
Because the hon. Member for Tunbridge Wells has tried to make a cottage industry out of the issue of energy unserved, let me explain why I believe he is engaging in the alarmism that he said he was going to try to avoid and putting a wrong spin on the matter. The Redpoint analysis, published at the time of the national policy statements, updated the figures from the low-carbon transition plan. I will send the hon. Gentleman a copy if he does not have one. It says that energy unserved, which the hon. Gentleman made such an issue of, will be zero in 2017; it says that the capacity margin will be 15 per cent. in 2017 and will stay above 10 per cent. for the rest of the decade.
What that illustrates is why the hon. Gentleman's interpretation of the original graph is so alarmist. Demand and supply projections for seven or more years out are always going to be subject to significant change. They are not really a forecast of our security of supply position, but information for the market to respond to, which it does. That is what we have found in the past. When I came into this job, people were saying that 2015 would be a big problem; the hon. Gentleman is now saying that the problem will come in 2017, but I have given him updated projections today. I urge him to engage seriously in the debate.
Edward Miliband: I shall give way in a moment. I believe-I shall say more about this after I have heard the hon. Gentleman's intervention-that the problem that Britain faces in relation to energy is not so much one of security of supply, but a different question.
Greg Clark: The figure referred to the Government's central expectations, assuming that all the policies pursued in the paper had been enacted-but may I ask the Secretary of State whether, when he made his statement to the House in July, he had read the table that included the prediction of energy unserved at 3 GWh?
Edward Miliband: Yes, of course. I read all the documents-well perhaps not all, but as many as possible of the documents that my Department produces.
Greg Clark: I am grateful for that, so will the right hon. Gentleman explain why, if he had read that document before he made his statement, he failed to mention a figure of such seismic importance-revealing that for the first time since the 1970s, the Government were expecting power cuts during the years ahead?
Edward Miliband: Because, as I have just explained to the hon. Gentleman, that figure is not of the seismic importance that he claims. He obviously has his alarmist rather than his consensual hat on at the moment. I have to tell him that alarming people about energy issues is not a mature way to conduct politics. He needs to recognise that the analysis we produced in July as part of the low-carbon transition plan has since been updated. I have already said that I will send him a copy of the update, as he has obviously not read it himself; I urge him to read all the documents that my Department produces. This particular information can be found in figure 32, in a technical annexe relating to a carbon capture and storage demonstration; it shows energy unserved not at the level mentioned by the hon. Gentleman, but at zero in 2017. The hon. Gentleman needs to understand that taking one figure, pretending that it is somehow a prediction of power cuts, which it is not, and then asking why I did not mention it is not helpful. I did not mention it because he has afforded it an importance way out of proportion to what it suggests.
Diversity is very important to us and to our electricity system, but what do we need to maintain our low-carbon diversity? Before the hon. Gentleman's intervention, I said that I would address that question. The real question for Britain is: do we carry on with a high-carbon security of supply or do we move to a low-carbon security of supply? That cannot be taken for granted, because it will be very challenging for any Government. All the low-carbon sources that I think we need-renewables, clean coal and nuclear-are challenging, and we need a combination of strategic Government and markets to make them happen.
On renewables, that is why we have reformed the planning system, taken action on the grid, stepped in to work with the European Investment Bank to finance onshore wind, increased the offshore renewables obligation and announced-last week-the biggest offshore wind expansion programme of any country in the world.
The hon. Gentleman complained about our record on renewables, and I wish that our country had done better on onshore wind. We have not done better, in part because of the planning system and people's objections, but it so happens that we are the world leader in offshore wind. Throughout the world, offshore wind generates about 2 GW, and a bit less than half of that is in the UK. The exciting thing about my announcement last week-I pay tribute to the Crown Estate for its work on the matter-is that it mentioned another 32 GW of offshore wind generation-in a world where there is only 2 GW. That is the scale of the ambition that we can have for offshore wind in this country.
Mr. Weir:
I appreciate what the Secretary of State says about offshore wind, which I also support, but I make the point that I made to the Conservative spokesman. Offshore wind energy often has to be brought on to the grid from remote places, and there is a continuing problem with transmission charges. The problem was
exacerbated again last week when it was suggested that National Grid is considering doubling transmission charges from some islands. Will the right hon. Gentleman tackle that problem once and for all and ensure a fair distribution system, so that such energy is on the grid and available?
Edward Miliband: That is a long-running issue, but it is worth pointing out politely to the hon. Gentleman that, as a result of the system that he complains about in relation to generation, his constituents-the consumers who are nearer such generation-will have lower prices. I assure him of that. If we think that projects are not going to go ahead because of the scale of the generation charges, intervention is possible. He is welcome to contact us about that issue, which has been looked at in the past.
Mr. William Cash (Stone) (Con) rose-
Alan Simpson (Nottingham, South) (Lab) rose-
Edward Miliband: I shall give way to the hon. Member for Stone (Mr. Cash), but then I shall try to wind up so that Labour and Opposition colleagues can speak.
Mr. Cash: I have been very enthusiastic about the Secretary of State's comments on carbon capture and the development that is essential in that area, but so far-I may be anticipating him-he has not said anything about onshore wind farms. He knows that the Under-Secretary of State for Energy and Climate Change, the hon. Member for Stafford (Mr. Kidney), who is sitting next to him on the Front Bench, and I have a boundary issue regarding several onshore wind farms, and there is deep opposition to them. Will the Secretary of State therefore be good enough to explain why Severn Trent, for example, is encouraged to develop onshore wind farms simply because it happens to own land-irrespective of either the amount of wind or the location of those projects? Will he get that policy right and stop promoting those ridiculous onshore farms?
Edward Miliband: I am sure that on this issue, as on several others, the hon. Gentleman now speaks for his Front-Bench team as well as for himself. I do not agree with him about onshore wind, I am afraid. Onshore wind, along with offshore wind, needs to contribute to our renewable future, and one risk that the Conservative party poses is precisely in the form of its attitude towards onshore wind farms. I shall give way to my hon. Friend the Member for Nottingham, South (Alan Simpson) and then try to wind up my speech.
Alan Simpson: May I return to transmission access charges? My right hon. Friend will be aware that the big six energy companies by and large object to a change in the current system because they were given the distribution infrastructure as a dowry when the energy industry was privatised. That is why, in turn, they support the principle that everyone should pay for access. National Grid has said that it is open to the argument for socialising the cost of access, however, so will my right hon. Friend at least consider the distribution of costs among the network as a whole, rather than an entry price that works against a shift to new entrants?
Edward Miliband: My hon. Friend has great knowledge of these and many other subjects, so anything that he asks us to look at will be looked at.
John Thurso: With regard to offshore wind, may I draw to the Secretary of State's attention the potential problem of the supply chain, in particular at the Nigg yard? Given that there is one turbine per platform, 100 platforms are required for a 500 MW installation, and the supply chain to deliver that number is not in place. I have spoken to Lord Hunt about this, and he has been very helpful, but I wish to draw it to the attention of the Secretary of State.
Edward Miliband: The hon. Gentleman may consider it drawn to my attention now. One of the ways in which we can get ahead in the offshore wind industry is with generation, which is a necessary, but not sufficient, condition for getting the industry in this country-
Dr. Alan Whitehead (Southampton, Test) (Lab) rose-
Edward Miliband: I want to let hon. Members, including my hon. Friend, speak in the debate, but I will give way this time.
Dr. Whitehead: Will my right hon. Friend briefly reflect on the agreement that was signed by his Department as one of nine member states to promote investigation of the European supergrid on offshore wind, and whether he considers that that might require some co-operation with our European partners in order to succeed?
Edward Miliband: I agree with my hon. Friend. The European supergrid is an exciting prospect that will obviously require co-operation in Europe-as well as sitting in the European Parliament with people who tend to believe that climate change is real and happening, rather than those who do not.
In closing, I wish to emphasise the point about diversity. We have acted on renewables. We are acting on clean coal, including legislating for the clean coal levy-I hope that the Conservative party will start supporting that. It sounds as though they are not only now supporting it but saying that it should do more. That is a change in their position, but a welcome one. On nuclear, we have published an important national policy statement. The role of the Infrastructure Planning Commission is also important.
There is still an issue about the carbon price, partly as result of Copenhagen. We continue to think that the best way to raise the carbon price is through the EU fulfilling its commitments to go from 20 to 30 per cent. Last week I said that we should look at how Britain can most economically meet its low carbon obligations and whether further action will be necessary, and that is the point of our road map to 2050.
To have a successful energy policy we need diversity and energy efficiency, which is an important part of ensuring that we minimise the demands on the system, as well as understanding the role of government. Strategic government is important alongside the role of the market. As we pursue this debate, we should do so on the basis of facts and robust analysis, without engaging in alarmism of the British people. That does not give politics a good name, or enlighten the public debate. That is why we will vote against the Opposition motion tonight.
5.29 pm
Simon Hughes (North Southwark and Bermondsey) (LD): I welcome this debate, which is topical and appropriate. I also welcome the fact that it began in a more consensual way than expected, given the comments by the hon. Member for Tunbridge Wells (Greg Clark) in recent days and the bad weather in this country. The Secretary of State confirmed that we have experienced the highest demand ever. That demand was met in the last week, as official reports confirm, from various sources, with 45 per cent. of our electricity output coming from coal, 37 per cent. from gas and 15 per cent. from nuclear, with a small proportion from wind. So Britain, thank goodness, has diversity of supply.
There has been a diminution recently in the amount of our own oil and gas that we have been taking out of the North sea, but as the Secretary of State said last night at the oil and gas industry reception, as the hon. Member for Aberdeen, South (Miss Begg) reminded us and as colleagues from Scotland know all too well from their constituencies, we still have a fantastic natural resource. We have used it, but it will continue for a significant number of years to come and we also have further unexplored oil and gas resources, particularly west of Shetland and around the coast of Scotland. We have been very blessed with our natural resources and that has given us a security that has seen us through in recent years and in recent days, too. Energy security is fundamentally important. In the parts of the world where it does not exist it is one of the greatest causes of political insecurity, conflict and worse-last winter, we saw in our continent the huge tension that arose between Russia and Ukraine-and therefore it is very important to obtain as much consensus as possible.
The second consensual point that I shall make, before moving on to a comment about the motion that is a bit less consensual, is that we of course need more storage capacity-I do not think that there has ever been any disagreement about that, and the Liberal Democrats are not complacent. My hon. Friends the Members for Cheltenham (Martin Horwood) and for Northavon (Steve Webb) made that point when they served on the Energy Bill Committee in 2008. Their recollection is that there was a general consensus among all three major parties-I imagine the same could be said of the nationalist parties-about that.
However, although we need more storage capacity, the important point is that there is no crisis-there is not the sort of crisis that the Conservative party would have us believe. Thus, I regret, as we all should, the tone and nature of some of the comments made by the hon. Member for Tunbridge Wells over the past 10 days.
Mr. Ellwood: Will the hon. Gentleman give way?
Simon Hughes:
I shall in a second. The Conservative party went out into the public domain-into the television and radio studios, and into the national press-and positively alarmed people with false statistics and fictitious claims. That is irresponsible for a party that aspires to be in government. The right thing to do is to try to be accurate about the position and not say things that are immediately contradicted, as these were. I am about to provide the source that backs up that point. This is not about my saying so; it is about other people saying so.
The claims were contradicted by those in the industry who know what they are talking about and who deal with these issues every day.
Greg Clark: The hon. Gentleman makes a serious allegation when he suggests that these were false statistics. That is clearly not the case. The statistics that we issued were taken straight from the National Grid Company, and they show what we said clearly-I have the press release here-which is that
"At today's level of gas demand, our storage level equates to...8.1 days."
It pointed out the actual demand on each day and the amount of storage. That is a factual statement and I hope that he will accept it.
Simon Hughes: Of course I accept that, but if one deduces from that or if it is implied-or if one allows others to infer from it-that that is the amount of gas we have available and therefore when we use that up there is no more, on its own it is a statement that one must qualify and add to. [Interruption.] No, the hon. Gentleman knows perfectly well what the background and context is. First, this country has far more of its own resources than the countries with which he compared it-I can show him the figures if he does not believe me.
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): Will the hon. Gentleman give way?
Simon Hughes: In a second, but let me just deal with this important point. This debate is taking place partly because the Conservative party wanted to have it be known that this country was in a critical position-the Conservatives are attacking not the Liberal Democrats, but the Government on that. My job is not to defend the Government; it is to try to ensure that people who were bound to have been alarmed and, unsurprisingly, have been are at least reassured that there is the security of supply that they need to know will see us through this winter and into the months beyond. The figures on the percentage of natural gas supply imported by comparable countries are as follows: Austria 82; France 98; Belgium 100; Germany 83; Italy 90; Spain 100; Czech Republic 98; and Ireland 91. What is the figure for the UK? It is 26 per cent. The reality is that we are in an entirely different league.
The hon. Member for Tunbridge Wells knows that we have had the Rough storage facility for a long time, and that it would take 64 days to empty it. That is not my figure but the one provided by National Grid. The facility does not, in any event, have the capacity to deliver a sufficient amount to empty it in eight days, but we do not need to draw on it fully anyway, because we are continuing to produce and distribute a huge amount of supply from our own resources. I join the Secretary of State in paying tribute to the people working for National Grid and out there in the North sea and elsewhere.
In the past 10 years, the market, supported by the Government, has delivered on-stream the interconnector with Norway, which brings huge supplies. Norway has fantastic capacity-the largest by a mile of any country in Europe. We also have the interconnector with Holland, which acts as a sort of collector for other supply.
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