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How do we organise ourselves so that there is the diversity that we need, not only in terms of supply but as between the various forms of generation? I worry that we have had too much emphasis on process and far too little on outcomes. I am a great believer in renewable energy; I do not think anybody could criticise me on that score. Ultimately, however, we should be aiming to have the most cost-effective way of getting energy security and lowering our emissions. It may be better to provide
more support for low-carbon generation than to put all our eggs in the basket of renewables. I say that not because I want fewer renewables but because we have to get there quickly. I would like to see a greater emphasis on outcomes than on process. For example, people in the British wind energy industry often argue on the basis of how wonderful wind is. I want to have the lowest carbon production of energy that we can have-I do not mind how we do it. Tomorrow the mix will be different from what it is today, but let us ensure that we do not miss the important issue, which is how we get the energy we need.
That leads me to say that I am terribly disappointed with the Liberal Democrats, but I suppose I should expect that. It is no good their sitting there saying, "We are against nuclear power", when in fact it is an essential part of any delivery. In my constituency we are very keen on having it, but I say to the Secretary of State that he is wrong about the planning arrangements. He is right about the first bit, which we all agree on-making the national decision about safety and need-but it is essential that there be a small local inquiry by somebody who is not one of his people but an independent person who can listen to the local issues.
That is not going to happen. We are to have another lot of apparatchiks under another lot of quangoists, who will come around looking at us sniffily. Dame Deirdre Hutton will be around again, telling everybody what to do. My constituents want an opportunity to say in public what they want in relation to the dualling of the bypass and the other issues that affect them. They want to know that they will be listened to by an independent person who then advises the Government, not by some Government-appointed apparatchik.
We must also reduce demand. I am a great enthusiast for a lot of the things that the Secretary of State is doing, but many of the details are not right yet. I was appalled to discover that the carbon commitment arrangements will exclude very large numbers of very big users because of the peculiar decision that if they do not have a half-hour meter arrangement, it does not matter how much they use. That means that a large chain of small shops could use exactly the same total amount of energy as a smaller chain with larger shops, but one will pay and the other will not. The effect will be serious, and it is a stupid thing to have happened. I am sure that he had nothing to do with it, but I merely say to him that it can be changed rapidly. Although charming, the explanation that I received is not really very effective.
I hope that the Secretary of State will accept that those of us who have largely supported his activities will have to be, to use his word, robust in sometimes saying to him, "This is just not right." If we are going to win this battle, we all have to be prepared to speak out and speak clearly. That leads to the fundamental question of how we can reduce our use of energy and produce it efficiently so that our national security position is improved. That requires a much faster move towards smart metering and smart grids. He has done us a great favour by getting on with it, but we need to get on with it very much faster. There are various ways to do that, and I hope he will be open to some dramatically different suggestions as to how to achieve that aim. We also have to do more to ensure that when we have opportunities to reduce our energy use, we take them. I am not sure that we are doing that fast enough, and I want to press the urgency of the matter on him.
I wish to say something to my Front-Bench colleagues. We will not achieve what we need to unless we use every single possible weapon. There is a way of increasing our efficiency in Europe that will make a very big difference if we are only prepared to work with our colleagues in the European Union. We have to be tough about that, because we really must use the EU as effectively as possible to deliver that end.
I say to the Government that they should move faster and accept that they are behindhand because of what has happened so far. I say to members of my own party that we have to use every mechanism possible. I say to the Liberal Democrats that it is not acceptable to go on with a theological position that is intolerable, intolerant and unacceptable-but they are, after all, Liberal Democrats, so we expect that from them. They will pay a big price for it at the next election, when people realise that the real opponents of combating climate change are Liberal Democrats.
6.4 pm
Mr. Elliot Morley (Scunthorpe) (Lab): It is a pleasure to follow the right hon. Member for Suffolk, Coastal (Mr. Gummer), and I welcome this debate on energy security. However, I was surprised about the alarmist headlines about eight days' supply. The hon. Member for Tunbridge Wells (Greg Clark) generally makes a reasoned and well balanced contribution to such debates and there are real issues to address, but I agree with the hon. Member for North Southwark and Bermondsey (Simon Hughes) that alarming industry and domestic consumers does not help-I realise that the hon. Member for Tunbridge Wells did not mention domestic consumers, but people often do not read beyond the headlines, and his statement was unjustified.
That is not to say that we should not address storage and supply to local industries. I had a case in my constituency of a company on an interruptible supply having its gas cut off, but that happened not because of a shortage of gas but because of pressure problems, which were related to cold, distribution and infrastructure-there were a number of reasons, and they may well need to be addressed. When it comes to choosing which companies have their supplies cut off, there are problems with advance notice. In addition, some companies have an alternative source, but some do not, and there is a problem with how long each is cut off. There should be a fair rotation because of the impact on certain companies compared with their rivals. I want to put on record the fact that I received enormous support and advice from the Secretary of State, who demonstrated his knowledge of the issues when I raised them with him. I am glad to say that the supply was reinstated, protecting 300 jobs locally and 1,500 nationally.
There are issues to address but, generally speaking, bearing in mind that we are in the coldest period that we have had for 30 years, supplies of electricity and gas have been pretty good, and I add my support to those who will ensure that that continues through the winter months.
John Hemming (Birmingham, Yardley) (LD): On today's figures, National Grid estimates that for a one in 20 winter, 502 million cubic metres of gas a day will be needed, but today it could produce only 447 cubic metres. Is that acceptable?
Mr. Morley: It is acceptable if gas supplies are maintained. In fact, the hon. Gentleman's colleague, the hon. Member for North Southwark and Bermondsey gave a good, detailed analysis of the capacity and reserves, which I encourage the hon. Member for Birmingham, Yardley (John Hemming) to look at. That demonstrates that diversifying our supply and moving towards a low-carbon supply is good not only in relation to climate change but in addressing the potential problems of security of supply, fuel poverty, jobs and investment. Moving towards a low-carbon economy has a range of advantages.
On fuel poverty, which is related to energy supply in the current circumstances, I welcome what has been done on insulating people's homes through the Warm Front programme. Energy efficiency is one of the cheapest and most effective ways of reducing energy demand and helping to meet social demand, and it improves the availability of supply. However, we need to do an awful lot more in the private rented sector on creating mechanisms to improve insulation.
Incidentally, I welcome the improvement in cold weather payments: my constituency will be receiving two weeks' payments. I know that this is not the responsibility of my hon. Friend the Under-Secretary of State for Energy and Climate Change, but there are some eligibility anomalies, because some people on disability living allowance do not receive the payments. Those anomalies need to be addressed in discussions with other Departments.
We need to encourage more renewables. I welcome what has been done, including the recent announcement of the enormous expansion of offshore. That is of particular local interest in my constituency. The Humber is very well placed to be a centre for the construction and maintenance of offshore wind farms, and for CCS and biomass development. Jobs in engineering and support go with those things, not least in the construction of the steel that will go into the towers that will be built. Those developments will mean jobs and investment, much to the benefit of local people.
I want to make one last, quick point. We need to encourage as great a diversity of supply as possible. Micropower has enormous potential, which has not yet been realised. I very much welcome what the Government have done on feed-in tariffs; it is exactly the right way forward. However, what is being proposed is not enough to kick-start the sector. It would be a lot better if the measures could be front-loaded to a higher feed-in tariff, which could then be tapered off, to give some incentive to get the industry going. Other measures could be introduced, such as extending the boiler scrappage scheme, which I also welcome, to combined heat and power boilers; I know that we are at the beginning of their commercialisation.
We need to use every tool and every incentive available, because we have to move to a low-carbon economy as quickly as possible. All political parties have a responsibility to get that message over to the public. The changes have to be made. We must have the planning procedure that brings them forward and we have to get behind the investment incentives, to make sure that it all happens.
6.11 pm
Mr. David Heathcoat-Amory (Wells) (Con):
I am pleased to follow the right hon. Member for Scunthorpe (Mr. Morley), who speaks with great authority on these
matters. I want to step back from the problems caused by the cold weather snap and try to examine some of the more strategic issues.
Energy security is inescapably a duty of Governments, and this Government have let matters drift. We have heard in this debate about the decline in oil and gas reserves in British waters, the retirement of coal-burning stations because of emissions controls, and the predicted decommissioning of nuclear stations.
What is even more worrying is what is coming at us in the opposite direction because of tightening world markets and global trends, one of which is the simple fact of population increase. The population of the world is still going up by nearly 1 million every five days. If these people are to have any kind of standard of living, they are going to use increasing quantities of energy; during the next 50 years, the human race will probably consume more energy than it has used in the entire course of human history to date.
There are also political developments, with countries such as China seeking to secure their energy supply chain in a new scramble for Africa. Countries such as Russia and Venezuela are explicitly using their energy reserves as a foreign policy weapon. All that adds up to an extremely worrying global situation, just as the Government have completely taken their eye off our domestic needs. There is also our economic vulnerability; we are already running a very big balance of payments deficit in energy. That will get worse. We have had a currency devaluation, which has made us all poorer in world terms. That will not cure the problem of the financial deficit in energy unless the Government take action.
I thought that my hon. Friend the Member for Tunbridge Wells (Greg Clark) was rather too kind about the Government's record. We will all remember-or should do-the energy White Paper of 2003. In my view, it was one of the most irresponsible documents ever issued by a modern Government. It effectively shut off nuclear power development completely. Sadly, the right hon. Member for Leicester, West (Ms Hewitt) is not attending this debate. She might be an extremely incompetent plotter against the Prime Minister, but she was a great deal worse as Secretary of State for Trade and Industry. Not only did she issue that dreadful White Paper, but she sold Westinghouse, the last of the British hopes for nuclear power generation.
The consequences of that White Paper have been to reduce us from being a possible world leader to the status of subcontractor. That is extremely serious at a time when even the Government are trying to restart our nuclear programme. All that was known at the time about our decommissioning of nuclear reactors and the decline in gas and oil reserves, but instead of a concerted programme, there has been an absurd over-reliance on renewables.
I am not "anti" all renewables, and I have an interest to declare in a possible hydro scheme, but as for wind power, I noticed that the big windmill on the M4 near Reading that sometimes goes round was stationary during the recent cold snap. It is not only unwise but dangerous to suppose that renewables can make up the gap. That can be done only by nuclear power, which is virtually carbon-free in operation and is a mature technology
that has been with us for more than 50 years. We could have been a world beater. There is a missed opportunity there, which we must hasten to correct. The problem of storage must be addressed, but this solution could overcome the problem of security. Uranium supplies are virtually inexhaustible, and we have large storage facilities for plutonium and enriched uranium in this country.
My last request is for the Government to participate in the next generation-the generation 4-nuclear power station programme worldwide, so that once more we can export not just energy but nuclear technology.
6.16 pm
Alan Simpson (Nottingham, South) (Lab): It is extremely unfortunate that the claim about there being eight days of gas supply left will fall into the same category as people being 45 minutes from extinction by Saddam's nuclear weapons. I say "unfortunate" because there is a crisis in energy security that has to be addressed. However, it needs to be addressed over the next eight years, not the next eight days. The 2008 House of Lords report on energy security is a benchmark to which we all ought to refer, because between 2012 and 2017 energy capacity margins in the UK will fall below the 20 per cent. security margin to which we have become accustomed. We need to have a debate, and it needs to take place now, but it should be about what we do over the coming eight years.
There are two types of security crisis. The first is a crisis driven by the supply levels and the second is a crisis of security. It is important to recognise that the affordability issue in connection with energy security is sadly epitomised by the deaths of Jean and Derek Randall, who froze to death in their own bungalow last week. They are just two examples from among the 5 million households in Britain living in fuel poverty, for whom energy security is a day by day, week by week, winter by winter crisis that they have to get through. Those households are the most severely affected by the fact that household average energy bills have risen to £1,225 a year-more than double what they were in 2003, and a 33 per cent. increase from what they were at the beginning of 2008. There is an ongoing crisis in energy affordability that households across the UK have to face.
The Select Committee on Environment, Food and Rural Affairs assessed what it would cost us if, as a country, we were to commit ourselves to eradicating fuel poverty in housing by 2016 or 2017. The estimate was that it would involve an extra cost of about £3 billion a year. If we were to do that, 83 per cent. of the households in Britain would be taken out of fuel poverty by that time. In energy security terms, one of the most critical results would be a reduction of household domestic energy consumption by 56 per cent. The first of the measures that we can take that will dramatically change both quality of life and energy security is related to demand reduction.
The second issue that the Government need to address concerns the shift into renewables. I know that the Secretary of State has been putting up a heroic battle over the feed-in tariff framework that he is about to announce at the end of this month or the beginning of next month. I have to say that my understanding is that he is not winning that battle.
Colin Challen (Morley and Rothwell) (Lab): My hon. Friend will have read the press comment that the expansion of our offshore wind generation will create a lot of foreign jobs for well-established companies. Does he agree that if we have a higher feed-in tariff than is currently proposed, we will create a critical mass in our own small and medium-sized enterprise sector, which can get into the market on a smaller scale?
Alan Simpson: That is absolutely right, provided that we set sufficiently ambitious tariffs, which I think need to include a three-year period and a 10 per cent. internal rate of return. That will give us the sort of renewables industry that the UK does not have at the moment. Those who say that a cost will have to be paid should look at the Deutsche Bank report that analysed the effect of that approach in Germany and pointed out the merit-order effect-avoided energy consumption from the most expensive fossil fuels has resulted in savings to the German Government of €9.4 billion. They achieved that simply by setting themselves that level of ambition. If we stick with our current low ambitions, we will fail miserably to take the opportunity that, as my hon. Friend the Member for Morley and Rothwell (Colin Challen) rightly points out, is there for the taking. It would deliver job security as well as energy security.
We also need to engage with a revolution in our energy thinking. I urge all Members to look at what might come to be referred to as the LichtBlick revolution. At the end of the month, a collaboration between Volkswagen and the LichtBlick company will propose a shift in energy systems thinking, to be piloted in Germany. Instead of building a power station, they are considering 2 GW of energy generation, which could cover the whole city of Hamburg. That will be based on the installation of 100,000 combined heat and power units in homes, factories, schools and health centres, all of which are not only domestically and individually controlled, but centrally co-ordinated. As energy for the city is required, instruction levels can be raised, allowing 2 GW of energy to be delivered collectively from people's own homes.
Mr. Gummer: Does the hon. Gentleman agree that the proposed system of feed-in tariffs is absolutely unsuited to such an arrangement? We need a revolution in how the feed-in tariffs work, but it should not just come from the bottom layer; we need to raise the level and involve large factories as well.
Alan Simpson: Absolutely. It is absurd that we in the UK are restricted to a 5 MW threshold, when we should have a 10 MW threshold-or no ceiling at all, as is the case in the rest of Europe. We need to consider how our towns, cities and regions can deliver their collective energy security on a level that meets their needs and in a way that is collectively owned and accountable. If we can grasp that vision, we can deliver the energy security that the country needs. That will not come from a reliance on energy tyrannies or fiefdoms elsewhere; it will come from an ability to meet those needs from our own resources. However, all that needs to be driven by a different vision, and one on a bolder scale, than is currently on offer in any of our policies.
6.23 pm
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