Orders of the Day — Eec (Energy Policy)

Part of the debate – in the House of Commons at 12:00 am on 3rd December 1974.

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Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian 12:00 am, 3rd December 1974

I am glad that the opportunity has been found to debate these two important documents. The first— No. R/1472/74—deals with the general strategy which the EEC Commission proposes should be adopted towards energy supply in the Community over the next 25 years, and particularly over the next decade. The document has annexed to it a number of detailed proposals on certain aspects of energy policy. The second document—R/127/74—deals with one detailed but nevertheless important aspect of fuel policy.

Discussion about the development of a common energy policy had been going on in the Community for many years before we joined. It has carried on ever since with even greater emphasis following the oil crisis last year. Despite this, not a deal has been achieved so far, which is not all that surprising, given the complexity of the issues and the differences between the national positions.

The broad aims of a policy—for example, the need to reduce dependence on imported oil as rapidly as possible— have not been difficult to agree. Where difficulty has arisen, it has been in agreeing the means of achieving broad objectives. Document 1472 is the latest attempt by the Commission to analyse the problems confronting the Community, to provide objectives for 1985, and to suggest policies to be adopted in regard to our sources of energy.

The Commission proposes a strategic objective for the year 2000 of 50 per cent. dependence on nuclear energy and 30 per cent. dependence on natural gas. The objectives proposed for 1985 have been drawn up to fit within that framework. The reduction in imported oil dependence is to be achieved partly through a programme of energy conservation and partly through a rapid expansion in the use of nuclear power and natural gas and the maintenance of coal production.

Although energy independence for the Community as a whole is not attainable by 1985, the Commission says that the proportion of imported energy in total consumption could be reduced by these measures from 60 per cent. estimated before the oil crisis to about 40 per cent.

Targets have been set for each fuel source but some of these are frankly, over optimistic. We have made it clear that we have serious doubts, in particular about the target proposed for nuclear generation by 1985—calculated at 200 gigawatts. Despite the expansion of national programmes which has taken place since the oil crisis, the sum total of these programmes is even now little more than 150 gigawatts.

The target for natural gas is optimistic, too. The Government have no objection to the concept of Community targets provided that these are realistic and are used only as a guide to the formulation of programmes by national Governments. We are not prepared to accept the unrealistic targets at present proposed by the Commission. In the chapter on electricity the Commission suggests that the use of natural gas in power stations should be limited and that the construction of new oil-fired base-load plant should not be authorised except in special circumstances. These suggestions are supported by the draft directives appended to the document.

We take the view that gas is a premium fuel and that any extension of its use into electricity generation will probably be limited both by commercial and policy considerations. There are special circumstances when this is the best use. We already have two power stations in England and Wales which take interruptible supplies of natural gas to the mutual advantage of the British Gas Corporation and the Central Electricity Generating Board. Natural gas may well be the right fuel to use to deal with such special circumstances as environmental protection, to meet peak loads and to improve the combustion performance of other fossil fuel burners. Also there may be instances where, for technical reasons, some limited supply of gas to power stations may be necessary.

In discussion of the Commission's proposals in Brussels among national experts we have pressed this point, and provisional agreement has been reached on modifications to the directive to accommodate these special circumstances.

The draft directive which proposes a limitation on the use of petroleum products in power stations has the potential for causing greater difficulty and as such is unacceptable to us in its original form. This is because over the next few years new oil-fired power stations will need to remain a part of our strategy to meet our future electricity needs.

Again, in discussion with the Commission and among national experts we have made our position perfectly clear. Provisional agreement has been reached on a wording of the directive which provides the required flexibility for us to meet future electricity demand while embarking upon a prudent expansion of our nuclear generating capacity and making full use of indigenous coal supplies. We are satisfied that the final form of these directives will reflect the United Kingdom concern over the wise use of available fossil fuels and will not impede us in providing adequate electricity for our future needs.

The Commission's proposals on coal production in the Community are compatible with the Government's policy in relation to national resources. The proposals are aimed at maintaining coal production at about its present level with a free market price policy and with Community financing where necessary to achieve suitable rationalisation, for example in existing mines and to open up new productive capacities.

I turn now to the Commission's proposals for oil. These reflect the fact that, unlike the United Kingdom, the other member States of the Community must for many years remain heavily dependent on imported oil. They are thus more ready than perhaps we are to adopt objectives and procedures which offer some prospect of securing oil supplies on reasonable terms and to pin their hopes on common Community policies. The chapter, after spelling out some fairly obvious factors and a number of principles, proposes four pillars or objectives of Community oil supply. They are, a common approach to other oil consumers and to the producing countries; the development of safe sources of oil; arrangements for dealing with supply difficulties; a properly organised world market.

On the first of those little need be said. There are obvious limits to what the EEC can do, but it is clearly desirable to improve relations between oil producers, for example through the Euro-Arab dialogue, and with the other main consumers, such as the United States and Japan. It is, however, unlikely that the Community will for some time to come be able to speak with a single voice in international discussions as this section of the chapter suggests.

The second objective refers in the main to the scheme adopted in 1973, under which £10 million is being provided for each of the three years 1974–76 from the Community budget to support technical developments likely to improve the oil prospects in safe areas. The forthcoming Council meeting of Energy Ministers will be asked to approve the first allocation of funds under this scheme and to endorse in principle its extension. This is an area of Community policy which, if approached with realism, should offer modest prospects of improving supplies of oil mainly in the longer term, from which the United Kingdom should benefit.

The third objective, of dealing with oil supply difficulties, has largely been met by the establishment of the International Energy Programme—details of which were given to the House recently by my right hon. Friend—in which all EEC members except France are participating, together with the United States, Japan and other OECD members. The programme includes arrangements for dealing with reductions in oil supplies by the traditional producing countries. That is clearly the only sensible approach, as oil cut-backs and embargoes can be countered only by making arrangements which embrace all the main oil-consuming countries. We recognise, nevertheless, the need for the Community to have the best possible information on oil movements within the Community.