Energy Security

Opposition Day — [2nd Allotted Day] – in the House of Commons at 3:44 pm on 13th January 2010.

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Photo of Sylvia Heal Sylvia Heal Deputy Speaker 3:44 pm, 13th January 2010

I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister. I ask all hon. Members who are not staying for this debate please to leave the Chamber as quickly and quietly as possible.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change 4:17 pm, 13th January 2010

I beg to move,

That this House
notes the impending retirement of over 20 gigawatts of UK generating capacity, the ongoing depletion of North Sea oil and gas reserves and the nation's growing dependency on imported fossil fuels;
further notes the high and volatile prices of those imports and the threats to the constancy and adequacy of their supply;
regrets that British energy policy has failed to change with these circumstances and that, consequently, the nation's energy security has been compromised, as exemplified by the low levels of UK gas storage capacity;
acknowledges that fundamental reforms to the energy policy framework are required in order to attract the investment required to guarantee reliable, affordable and sustainable energy supplies;
calls upon the Government to take immediate action to ensure diversity in new electricity generating capacity and adequate levels of natural gas storage;
and, recognising that energy efficiency is the most cost-effective means of meeting Britain's energy needs, further calls upon the Government to implement policies capable of accelerating the deployment of efficiency improvements to millions of domestic and non-domestic buildings, in particular to the homes of the growing number of fuel-poor households.

If ever the House needed a reminder of the importance of affordable, reliable energy supplies, this winter has provided it. It has also reminded us that the measures that we need to take to safeguard the security of those supplies will be tested. As the Engineering Employers Federation said last week:

"The long-standing vulnerability in our energy system has been exposed...As a nation we need to take security of energy supply more seriously."

This time around, a number of businesses on interruptible gas contracts were cut off. Thankfully, supplies to residential customers were maintained, but this is no cause for complacency. Temperatures have been unusually low, but the effects of the recession have depressed underlying demand. Fortunately, there has been no repeat this winter of the unresolved dispute between Russia and Ukraine, which has meant that supplies from that region have so far not been disrupted. There is, however, no guarantee that we shall not have another cold winter, or that Russia will not turn off the taps in the future, or that we shall not have a problem with the Rough storage facility, as happened four years ago.

The Government know that, as Shakespeare said:

"When sorrows come, they come not single spies, but in battalions".

The only thing that we should expect is that unexpected events will happen. To guarantee our energy security not just most of the time but all the time, we need to be prepared. The head of Ofgem has said:

"The headline fact is that Britain is the single most exposed country among the big players in Europe".

Current energy policy is not adequately prepared for what could have been, and should have been, foreseen.

Let me say from the outset that I do not blame the Secretary of State for this. After all, he has been in the job for just over a year, and it has taken at least 10 years of drift to leave Britain this unprepared for the energy challenges of the 21st century. I strongly suspect that he privately shares our analysis of the situation. He himself said today that

"there is clearly an urgent need for additional gas storage", and I welcome that recognition. He says that we should have more gas storage and greater diversity of supply, including nuclear power and renewables, and that we should promote energy efficiency. I think that there is agreement on this that crosses party lines.

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Photo of Peter Luff Peter Luff Chair, Business, Innovation and Skills Committee

My hon. Friend makes an important point. The Committee that I chair, which is of course a cross-party Committee, has repeatedly warned of the dangers of inadequate gas storage. It is an eminently foreseeable problem which should have been dealt with sooner. Can he suggest any reasons for the failure to deal with such an obvious problem much more quickly?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I am afraid I cannot, but my hon. Friend is right to draw attention to the work of the Select Committee on Business and Enterprise over the years. In its landmark report "Energy prices, fuel poverty and Ofgem", produced in 2008, it stated:

"This is an issue our predecessor Committee raised in its 2002 and 2005 Reports on security of supply and fuel prices. Significant additional storage, beyond that currently planned, is needed to reduce volatility in the wholesale gas price...It is now an issue of national importance and should be a high priority in domestic energy policy."

As I have said, I cannot blame the Secretary of State for that. It was his predecessors who should have responded in a timely fashion. I am glad that he now sees the need to respond to the challenge, albeit late in the day.

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Photo of Joan Humble Joan Humble Labour, Blackpool North and Fleetwood

Will the hon. Gentleman take into account the specific needs of individual gas storage applications? An application for underground storage on the border of my constituency and that of Mr. Wallace-I am pleased to see that he is present-is strongly opposed by our constituents on grounds relating to the geology of the area. Gas storage applications must be examined case by case to ensure that they are safe before it is decided that they should proceed in the national interest.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I agree with the hon. Lady to an extent. Of course it is necessary to consider whether individual locations are suitable for storage purposes. That makes perfect sense. It is clear that if something as important as gas is to be stored, safety must be paramount. However, I do not think that that should lead us to the conclusion that we should not nationally move towards greater gas storage. The fact that investigations of this kind take some time to complete is all the more reason to begin them earlier, so that they need not be conducted in a rush and there is not the exposure that we have begun to see in recent years.

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Photo of Philip Dunne Philip Dunne Opposition Whip (Commons)

My hon. Friend is being characteristically generous-hearted to the Secretary of State. Is this not the Secretary of State who, only a few days ago, told the media that we did not need to worry about gas storage in this country because we had such large offshore oil and gas deposits underground in the North sea? If that is the case, and if that is the justification for his predecessors' failure in not providing more gas storage facilities, why has the other major western industrialised country, the United States, which has substantial underground deposits of oil and gas, been creating significant strategic storage capacity over the past 10 years?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I agree with my hon. Friend, but the fact that the Secretary of State has described the situation as "urgent" may indicate that he has moved on a bit from that position.

As I have said, I do not think that this issue should divide us. Over the past few days the United Kingdom-based Chemical Industries Association carried out a survey following which it reported that nearly half its members believed that increased storage was essential to future investment by companies in the UK, and over a third claimed that the current uncertainty of supply-caused by a lack of gas storage-was restricting the ability of the sector to invest in the UK. The situation is, as the Secretary of State says, urgent.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

The consensual tone of the hon. Gentleman's opening remarks is in notable contrast to comments that he has made publicly in the press over the past seven days. He claimed that we had only eight days of gas storage left. National Grid immediately dismissed that as a "meaningless figure" which totally ignored the amount of national supply that we have available. Will the hon. Gentleman now apologise for what was an unnecessary, alarmist, inaccurate and misleading comment?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

Of course I will not apologise. I think that if there is one significant threat to the country's energy security, it is the possibility that the complacent approach of the hon. Gentleman's party will be adopted by others. I think he should listen to the counsel of his colleague John Hemming, who has taken a long-standing interest in this problem and has repeatedly urged us to act on it. As he believes this is an urgent issue, I assume he thinks we should increase the amount of capacity we have. The fact is that, at the best of times, we currently have 16 days' worth of storage capacity, whereas France has 120 and Germany has 100. Therefore, apart from the Liberal Democrats, I do not think anyone believes the amount that we have is adequate; and, of course, when we have high winter demand, such as we saw recently, that maximum level of 16 days becomes much less. One problem is that the concentration of our storage capacity at present means that it is difficult to withdraw it from storage at the rate that we could use it in cold snaps such as the current one. Therefore, as well as a greater increase in the number of days of storage, we need greater diversity so we can get it into the system more quickly.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

I ask my hon. Friend to resist the temptation to listen to the Liberal Democrats on this issue, on the basis that they are always in favour of things in general and against them in particular when there is a single vote to be gained.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I would agree with my right hon. Friend, who has always taken a responsible position on this subject, if I thought this was a good electoral strategy for the Liberal Democrats, but I do not believe that refusing to participate in a serious discussion that will ensure that we increase the resilience of our national energy supply will convince the electors at all.

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Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

I ask the hon. Gentleman, in the spirit of transparency called for by his colleague, Mr. Gummer, to clarify his position on the following question, which greatly concerns my constituents. What is the Conservative party stance on land-based wind turbines? While one may very well be in favour of offshore turbines, it would cause great disturbance to my constituents if the volume of turbines that is proposed were to be built. I have asked the following question on many occasions, but no Conservative Front-Bench spokesperson has answered it: if the Conservative party is elected to office, will it change the turbine policy of the current Government?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

We think that, in order to secure our energy supplies in future, we need diversity of energy sources. It was Churchill who said that the security of our energy supply lies in diversity and diversity alone, and it is important that we have contributions to our supply from across the piece. Therefore, we would change that policy, because one of the problems with the current onshore wind policy regime is that many communities-including some in the hon. Gentleman's constituency, perhaps-feel they gain no advantage from the siting of wind farms in their locality. They are sometimes concerned about what they might see as risks-they might not know whether the wind farms will be noisy, or what the impact will be. They will therefore often decide-on a precautionary principle, perhaps-to oppose the application because there is no countervailing argument. On the continent, however, wind farms tend to be much more community-based and community-owned. Whether in Denmark or Spain, the communities that host wind farms share in the benefits, such as by receiving revenue from the electricity sold or, in many cases, getting cheaper electricity. Our policy is to return some of those benefits-through the first six years of business rates, for example-and to look into how we might provide cheaper electricity to the communities involved. That at least provides a more balanced debate.

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I am grateful to the Conservative party for holding a debate on energy security. I agree that diversity of supply is important. It used to appear, to Labour Members at least, that the Conservative party's policy on nuclear-which, interestingly, is not mentioned at all in its motion-was to pop down to the supermarket and buy one if necessary. Life is not like that. Has the hon. Gentleman's party changed its policy on nuclear, and if so, what is it now?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I shall talk about nuclear later. I am pro-nuclear; I believe we need to get on with it. I think that one of the problems we face is that we now have a gap between the end of the planned life of our current fleet of nuclear power stations and the earliest possible date at which we can get new ones. That gap should not be there; we should have avoided creating it.

The Secretary of State expresses a view with which we all agree-that we need increased capacity in our gas storage system. I was surprised by the wording of the Liberal amendment, which is alarmingly complacent. I hope that at least between those on the two Front Benches there will be agreement on the action that is now required to guarantee Britain's energy security, not least because that action involves long-term decisions. We should not seek to make short-term differences. Companies will make major investment decisions worth £200 billion and lasting 20, 30 or 40 years. We should aim for a long-term view of diversity and more robust sources of supply.

British energy policy has been exposed as out of date. It was designed 25 years ago for a world in which Britain had an excess of generating capacity, where we enjoyed the security of growing North sea oil and gas production, and where concerns about local pollution and international climate change were not as intense as they are now. However, power plants get old, fossil fuel reserves dwindle away, and pollution builds up to crisis proportions. The Government have had ample warning on all those fronts.

Power plant lifetimes are a matter of record. The Government knew that our existing fleet of power stations would need to be replaced. The peaking and decline of North sea production has long been predicted and was already under way at the beginning of the Government's first term, with obvious implications for dependence on fossil fuel imports. In their 1997 election manifesto, the Government promised a 20 per cent. cut in carbon emissions by 2010, thereby serving notice on themselves that a transition to cleaner sources of energy would be required.

Despite the transformation some time ago of the basic assumptions underlying energy policy, the policy framework has remained fundamentally unchanged. A framework designed for an age of plenty is still with us in an age of insecurity. Sometimes Government are overtaken by events, but in respect of energy policy, the Government saw what was coming and did not do enough about it.

Let me explain where that leaves us in terms of the main areas of energy use-first, electricity. Back in July the Department of Energy and Climate Change unveiled its energy plan for the coming decade. It is good that there is such a plan and it is perhaps the most important document that the Department has published to date, but it contained a dark secret. It revealed that Ministers were expecting black-outs across Britain in the years ahead.

A chart in that document showed a big rise in what are called expected energy unserved, otherwise known as power cuts. From virtually no black-outs now, the Government said that they expected the level to rise to 3,000 MWh by 2017. That is the equivalent of three nuclear power stations shutting down at the same time, or to put it another way, 1 million people losing power for 15 minutes more than 20 times in the course of a year. Worse still, shortages would most likely strike at times of peak demand-that is, on the coldest winter evenings. The head of Ofgem warned us that the years following 2015 could be very cold indeed. [Interruption.]

The Minister sometimes complains, as he is doing now from a sedentary position, that the chart is taken out of context and that we ought not to make use of it in this way. We have always been very careful to make its context clear. It is an official projection included in an official Government publication, freely available not just to the Opposition, but to anyone considering whether to invest in this country over the next 10 years.

Let me turn to discuss coal. Our power sector, in which I include coal, will certainly need investment. Anyone who believes in diversity, as I do, needs to look at fuel sources right across the range. It is worth noting that, in the course of the big freeze that we have had during the past week, coal plant has at times supplied more than 40 per cent. of our electricity, helping to relieve pressure on gas supplies. The pressure on gas supplies would have been very much worse if we had been in the situation that we will arrive at in the next few years, when a third of our coal generating capacity is withdrawn.

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Photo of David Anderson David Anderson Labour, Blaydon

Is the hon. Gentleman satisfied that most of that coal will come from places such as Russia, where 6,000 miners a year are dying, so we are getting energy at the cost of people's lives? That would not have been the case if his former Government had not done away with the best mining industry in the world.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

There will be a future for UK coal within that, but it depends on a number of factors. The hon. Gentleman is absolutely right that we import a lot of coal from Russia. Coal is clearly more readily available and easily stocked than gas, so it contributes to energy security. I share his concerns about the safety situation there. We want to ensure that we operate using supplies that come from sources we can be proud of and confident about. I hope that in due course we can have more of a source of supply from this country as well. However, that depends on making progress on carbon capture and storage. If we subscribe, rightly, to a set of emissions targets that require CO2 emissions to come down by 80 per cent. by 2050, we will need to make a breakthrough on CCS if we are to be able to use coal as an addition to our diversity of supply.

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Photo of John Thurso John Thurso Shadow Secretary of State for Business, Innovation and Skills

The hon. Gentleman has rightly mentioned diversity of supply on several occasions. In that regard, will he clarify what his party's views will be in respect of offshore wind and marine tidal renewable energy? The July White Paper calls for, from memory, some 33 GW of generation. Much of that development is taking place in my constituency, with the potential for a great many jobs to replace those at Dounreay, which is being decommissioned. There is obviously uncertainty over the long term, and it would be most helpful if he could clarify his position.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I am delighted to do that. Our party is strongly pro the development of offshore wind and marine and tidal energy. Given the renewables resources that we have in this country, with one of the longest coastlines in Europe and some of the best conditions to allow the harnessing of the power of the wind and the tides, it is a source of great regret that we have made so little progress on that. Only Malta and Luxembourg generate less of their energy from renewables than we do. We need to accelerate that process. The announcement made the other day by the Secretary of State and the Prime Minister is a step in the right direction. However, it is regrettable that many of the jobs that could be generated, not least in constituencies such as those of the hon. Gentleman, are less certain than they might have been had we been further ahead and had not other countries established a lead.

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Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

One of the problems with renewables, especially in Scotland, involves the transmission charges for bringing the energy into the grid. What would be the hon. Gentleman's policy on that? Would he take action to reduce transmission charges or introduce a postage stamp scheme whereby transmission charges would be equal across the UK?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I cannot give a commitment that charges should be equal, but I recognise the point that the hon. Gentleman makes. It is no good developing plants that generate significant capacity offshore if we cannot then bring that energy onshore. We have suggested that the National Grid-it is keen to do this-should build its onshore network offshore so that it is easier for promoters of renewable energy offshore, whether wind, wave or tidal, to get it to where the customers are.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I want to make progress now, because lots of Members want to speak. If I have time, I will take the hon. Gentleman's intervention later.

On carbon capture and storage, I am afraid that the Government have dithered; I take no pleasure in pointing that out. In 2007, there was the announcement of a token competition for just one demonstration plant. Last year, there was a much more encouraging sign from the Secretary of State, after he took over, when he stood up in this House and made a bold announcement on CCS. There is to be an expanded demonstration plant programme-

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

Indeed. There will presumably be a second competition to embrace a wider range of CCS technology, for which Conservative Members have been calling for some time. However, despite the first competition having been announced in 2007, the winner has yet to be announced. The indications are that it will not be until 2011 at the earliest. As for the second competition, it is not even open yet. If I am wrong I shall be delighted to be corrected by the Secretary of State, because I would welcome greater progress.

I should mention a third competition, of course. As the Secretary of State knows, the one taking place in several countries and run by the European Union managed to announce the winners by autumn last year. I would simply observe that any organisation that can be outpaced by the European Commission has major problems. Unfortunately, foot dragging and bureaucracy is what we have come to expect from this Administration. The chaotic history of their policy on CCS has turned what could be a leading position for Britain into one in which we now lag behind China, Canada, Germany and Belgium.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I want to make a bit of progress, and then I will give way.

Nuclear, which Rob Marris mentioned, is another example of Government foot dragging. For years we have known when each of Britain's nuclear power stations would be retired. When the Government came to power, nuclear provided 26 per cent. of our electricity. Today, that contribution stands at just 13 per cent. and is set to fall further as more stations are retired. Ministers were well aware that replacing that lost capacity in good time required an early go-ahead, but it was not until the 2007 energy White Paper that it was given. It was another two years before the necessary changes to the planning regime were put in place. With the exception of Sizewell B, every existing nuclear power station will have reached the end of its planned life before it is even possible to replace it with a new one. Of course, the current timetable assumes that there will be no further delays. Given the track record of recent years, we cannot rely on that.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I will, because I know that the nuclear interest is very important in the hon. Gentleman's constituency.

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Photo of Jamie Reed Jamie Reed Labour, Copeland

I am grateful to the hon. Gentleman. Fans of satire will be listening to his comments with real interest, because the single biggest problem with the nuclear industry in this country can be traced back directly to the last Conservative Government's abysmal failure to deal with radioactive waste management. That is the root of the current reality.

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R

Jamie is completely correct and his assessment is entirely accurate. It's unscrupulous for Conservative politicians to expect the people of Copeland to de-politicize the "nuclear issue". The "nuclear issue" is...

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I have been disappointed by the hon. Gentleman's recent interventions on this matter. I have followed his speeches over the years, and he has recognised the importance that his constituents and people in his region place on certainty and continuity of policy. However, just in the past few debates he has taken a partisan approach to these issues that is against his constituents' interests. In the interests of their employment, he ought to reflect on the signals that he gives.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I will not give way, because I have given the hon. Gentleman his chance.

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Photo of Bernard Jenkin Bernard Jenkin Conservative, North Essex

I just wish to put on record what we all know. There have been Secretaries of State in this Government dealing with matters of nuclear waste who have refused to allow any papers regarding nuclear policy to cross their desk as a matter of principle. It is ideology, such as that from Margaret Beckett, that has paralysed the Government.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I said that I wanted to be constructive, and I welcome the Government's conversion to a more sensible policy.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

In the spirit of being constructive, may I urge my hon. Friend to urge the Secretary of State to include gas in carbon capture and storage? We are currently debating that issue in Committee. We are talking about CCS for coal, which is absolutely right, but the Government are adamant that they will not include gas in the levy that will shortly be rolled out. Why are we not looking to the future and ensuring that the coal-fired power stations, which will all close in 2020, are replaced with gas-fired power stations? We should be thinking about CCS for gas as well.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I am grateful to my hon. Friend for making that point. If we want to establish leadership on that, it is important that for demonstration purposes we examine all the technologies that are available. If, as I believe, we will not reduce our dependence on gas, it will be important in meeting our emissions target that we can capture carbon dioxide emissions from gas in due course. The Secretary of State is a reasonable man, and often when amendments are tabled he undertakes to consider them carefully. I hope that he will do so on this occasion and reflect on whether the matter can be included in the competition. That would be a good thing to do.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I will not, but I might later if I make better progress through the points that I want to make than I am at the moment.

I mentioned renewables and the importance of ensuring diversity of supply. However, there is another important point that comes from renewables: if we do not address some of the technical factors of renewables, such as intermittency, we could exacerbate the problem of energy security rather than solve it. For example, I am not confident that we have the policies to build the back-up capacity that we will need if we are to have a greater contribution from intermittent renewables. The conclusion of a comparative study commission by National Grid and a number of other organisations stated:

"While the Irish market is able to continually incentivise new peaking plant with increasing wind penetration, we are concerned that there is a real challenge in delivering very low load factor plant in the British market."

That needs to be addressed.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

No; I want to make some progress.

That brings me to the subject of gas, which has occupied our attention in recent days. Gas is a crucial fuel. As well as providing heat, it is our most important source of electricity, in terms of both quantity and the flexibility with which gas-fired plants can meet fluctuations in supply and demand. Yet despite the pivotal and growing importance of gas in supplying our energy needs, the rapid decline of North sea production and proven threats to the security of our pipeline supplies, we are still unable to store enough gas to see us safely through the coldest months. The consequences of that failure to plan ahead have been exposed in the past 10 days.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

No, I will not.

In that period, National Grid issued no fewer than four gas balancing alerts and supplies came under strain from the record level of demand. That boils down to four basic flaws in the current system. First, there is simply not enough storage capacity-no one apart from the Liberal Democrats doubts that. I mentioned that we have, at best, about 16 days' worth, compared to 100 in Germany and 122 in France. Ministers have dismissed that.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I have been generous in taking interventions so I now want to make progress.

Ministers dismissed that comparison, saying that our declining North sea supply means that everything is still supplied, but that is dangerously complacent, because the Netherlands, which relies much less than us on imports, has three times as much storage relative to consumption- [ Interruption. ] I think hon. Members are pointing out that I have not taken any interventions from a woman. If that is a deficiency, I am happy to remedy it by taking one from Shona McIsaac.

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Photo of Shona McIsaac Shona McIsaac Labour, Cleethorpes

I thank the hon. Gentleman for his generosity. Is he aware that my constituency is probably the one with the highest number of gas power stations in the country? Today, the local authority is giving its seal of approval to a biomass power station, which is going to create enough renewable energy to supply more than 500,000 homes. I therefore know quite a lot about the energy issue in this country. The hon. Gentleman must stop scaring the British public. There is far more gas in storage than he says there is, and far more gas that is easily available from the North sea and other sources. Will he stop scaring people about the lack of gas, because it is simply not true?

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

The hon. Lady's first point was constructive, and I share her welcome for the biomass plant-as I said, diversity is important, and the plant will help to create British jobs-but she is wrong to choose to ignore the problem of inadequate gas storage. We do not often get to talk about such things and people are not aware of them but, at times like this, when we see how little we have, it is important to galvanise support for action.

Let us take the Engineering Employers Federation and the Energy Intensive Users Group. In a letter today, they say:

"The bottom line is that the UK energy system was unable" last week

"to meet the needs of all consumers...To dismiss", as the hon. Lady seems to do,

"last week's interruption as a one-off also ignores the growing risks associated with increasing dependence on gas from overseas. The long-standing vulnerability in our energy system has been exposed-the UK has significantly lower storage capacity relative to demand than most other major gas-consuming economies."

That came from the Engineering Employers Federation and the Energy Intensive Users Group; it is what British employers say is necessary for them to continue in business and to continue to expand their businesses.

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Several hon. Members:

rose -

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

I want to be fair and to make progress. Many Members wish to speak and there is a time limit on speeches.

I said that we need more storage. Secondly, there are limits to how quickly that gas in storage can be extracted. At the start of December 2009, Britain's biggest storage site, the offshore Rough facility, was 99 per cent. full. Throughout the cold snap, Rough has been pumping out gas at its maximum capacity, but that has still not been enough to prevent the need for gas balancing alerts.

Thirdly, we have an insufficient margin for error. Our small stocks should be just enough to get us through a long cold snap. However, as I mentioned earlier, if just one other thing goes wrong, the knock-on impact will be enough to tip us over the edge into a system whereby it might be much more difficult to cope. Fourthly and finally, we should not confuse a system that prioritises who gets cut off with one that minimises cut-offs. Businesses, many of which have interruptible contracts, were the first to have their gas supplies stopped. That helps to maintain the supply of gas into people's homes, but it is bad news for the businesses that are struggling to emerge from the recession and remain open in these difficult times. As the Energy Intensive Users Group says, there is a real risk that disruptions could become more frequent. That would hit manufacturing hard and risk damaging the UK's reputation, as well as future inward investment.

The realisation that Britain needs more gas storage is not new. As I mentioned, the Business and Enterprise Committee, chaired by my hon. Friend Peter Luff, first highlighted the issue in 2002 and it has highlighted it repeatedly since then. According to-

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

No, I will not give way.

According to a recent written answer, the Government expect to build another 500 million cubic metres of capacity by 2012-another two days' worth of additional storage. Will the Secretary of State stand up in the House and claim that that is an adequate rate of increase? Perhaps we should all cross our fingers and hope that we will not have another winter like this one.

I want to give time for my hon. Friends and hon. Members from all parties to contribute to this debate. Making up for the lost opportunities of a wasted decade will take some time. However, we must move forward with a sense of urgency. The issue is about not only catching up with the past but getting ready for a future in which the global production of fossil fuels-especially oil production, on which our transport systems are almost entirely dependent-will come under increasing strain.

Mainstream voices, including oil industry chief executives, and even Ministers from nations belonging to the Organisation of Petroleum Exporting Countries, have already warned that the age of easy oil is over. The International Energy Agency has said that it expects crude oil production to level off by 2030. In Britain, the UK Energy Research Centre, a joint initiative of the leading research councils, with which the Secretary of State will be familiar, has said that we could hit that limit by 2020.

When asked what contingency plans they had for such an eventuality, the UK Government said that they did not have any because they did not think the situation was that urgent. That answer should fill us with dread, but it is one that we have heard time after time. It is symptomatic of an attitude that in the past has been complacent and has not involved the action that we could have foreseen was needed. It explains, among other things, why we do not have enough gas storage capacity. It also explains why we do not have an adequate margin of generating capacity for electricity in this country and why we have not made sufficient progress on carbon capture and storage, nuclear and renewable energy. It is why we are wasting the chance to insulate our homes and stop wasting energy; we may discuss that issue later in the debate.

We need a policy for generating energy, not excuses. We need to rebuild the security of our energy systems and infrastructure with significantly higher levels of gas storage. On electricity generation, the Government must make it crystal clear that a collapsing margin of supply over demand is in no way acceptable. If current trading arrangements cannot guarantee that the lights will stay on, those arrangements must be reformed. That means unblocking progress across the broadest possible spectrum of energy uses. That is why we welcome the Government's national planning statements on nuclear, renewables and other key technologies, but it is also why we believe that they should be ratified by a vote of Parliament, to protect them against the threat of judicial review, which could delay progress for even more years.

We also, of course, need to build the enabling infrastructure for those technologies-for instance, the smart meters in our homes, an offshore grid for renewables and pipelines for carbon capture and storage. Continued delay and uncertainty on these vital networks will cost us dear as investors turn to other countries while Britain is left behind.

Finally, if we are serious about reducing demand, we must act to make sure that, as we go further into a winter during which fuel poverty is rising, we make it easy for people to find ways to make fuel consumption in their homes more modest and efficient. In place of unwanted light bulbs, we need a green deal to make a real difference to our energy bills and a real contribution to our energy security. The solutions to our energy crisis are within our reach. All that we need is a Government with the vision, the will and, dare I say it, the energy to make things happen.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change 4:55 pm, 13th January 2010

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 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.

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Photo of Andrew Murrison Andrew Murrison Shadow Minister (Defence)

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Anne Begg Anne Begg Labour, Aberdeen South

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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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 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.

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Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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, 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.

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Photo of Celia Barlow Celia Barlow Labour, Hove

I thank my right hon. Friend for taking my intervention. Had 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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Ben Wallace Ben Wallace Shadow Minister (Scotland)

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 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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

I shall not get into individual planning applications, but I know that the IPC rightly takes safety issues seriously.

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Photo of Joan Humble Joan Humble Labour, Blackpool North and Fleetwood

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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

I am sure that my hon. Friend forms a formidable duo with 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 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:

"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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

Yes, of course. I read all the documents-well perhaps not all, but as many as possible of the documents that my Department produces.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

I shall give way to Mr. Cash, but then I shall try to wind up so that Labour and Opposition colleagues can speak.

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Photo of Bill Cash Bill Cash Conservative, Stone

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, 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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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 Alan Simpson and then try to wind up my speech.

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Photo of Alan Simpson Alan Simpson Labour, Nottingham South

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of John Thurso John Thurso Shadow Secretary of State for Business, Innovation and Skills

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.

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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-

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

I want to let hon. Members, including my hon. Friend, speak in the debate, but I will give way this time.

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Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

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?

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Photo of Ed Miliband Ed Miliband The Secretary of State for Energy and Climate Change

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.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change 5:29 pm, 13th January 2010

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 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 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.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

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.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

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.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

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.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

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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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

On a point of order, Mr. Deputy Speaker. I have listened carefully to the hon. Gentleman's explanation, but he has accused my hon. Friend Greg Clark of producing false statistics. That seems to be contrary to the rules of the House, and I ask you to ask him to withdraw the accusation.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

An allegation relating to whether information is correct or not is a matter of debate, and there should be an opportunity in the debate to correct it. As I am on my feet, I should like to say that time is precious and the House will want the debate to be fully comprehensive. The Front Benchers have taken up a considerable chunk of time with the speeches that we have already heard. I shall therefore maintain the eight-minute time limit on Back-Bench speeches for the first two speeches-one from either side-then I shall reduce it to five minutes.

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Thank you Mr. Deputy Speaker. My speech will be considerably shorter than those of the two Front Benchers who have spoken.

The idea that all our sources of supply could fail at the same time is just unfeasible. We need to ensure that the public understand that the position that was either alluded to or, certainly, interpreted by the Conservatives recently is clearly wrong. I want to cite certain objective commentators who can confirm that, so that the House will know that I am not making party political comments. The Daily Telegraph is not a natural supporter of the Labour party or the Liberal Democrats, yet, on 11 January, it stated:

"To be clear, it is highly unlikely that we will run out of gas: we are not facing the prospects of old ladies freezing in their homes as large swathes of residential customers have their supplies cut off."

Of course, we have become a net importer of gas, and we will import more.

Most importantly, on 6 January, National Grid's spokesman made an immediate response to the comments by the hon. Member for Tunbridge Wells earlier in the week, stating:

"We are absolutely not going to run out of gas...The UK is well supplied."

National Grid dismissed the hon. Gentleman's figure of eight days as a "meaningless number", because it ignored the amount of gas being imported and the fact that nearly half of UK demand is met by North sea production. National Grid has given further commentary in the press in the last few days, citing the official figures published at the end of last year in the latest edition of its review "Transporting Britain's Energy". They show that the potential supply from UK power stations is 28 per cent. above demand, and the review forecasts that this excess will continue through to 2016 and beyond.

I hope that the hon. Gentleman will accept that we have an adequate supply now and for the foreseeable future. There is no likelihood of it running out, and the only ones who have suffered are those companies who had negotiated an interruptible supply contract, which rewarded them with a lower price. They knew that their supply would be reduced for a limited period if demand was creating pressure. That is what happened, and it seems to be entirely commercially proper. They knew exactly what would happen in those circumstances.

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Photo of Greg Clark Greg Clark Shadow Secretary of State for Energy and Climate Change

The hon. Gentleman has quoted various people, but he has not been able to produce a single quotation proving that I implied or stated that the gas supply of any residential customer was likely to be cut off. I mentioned the Engineering Employers Federation, which said that the supplies of some of its members had been cut off. He should bear in mind what was said about the situation by his colleague John Hemming. He said:

"It is like driving blindfold on a cliff. You might go over the edge".

Does that not reflect the concern that we feel, and about which I still maintain that the hon. Gentleman is still rather complacent?

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I have spoken to my hon. Friend and I disagree with his analysis. That is not the official position of our party, just as there are members of the hon. Gentleman's party who do not always adopt his official position-not least on issues connected with climate change and the Copenhagen conference, which we debated recently.

I am afraid that, intentionally or unintentionally, those comments were alarmist, and I know from information I have been given that they have resulted in some customers of gas suppliers turning their gas down or off for fear that they will not have a supply in the future. That is not the message that we should send to the vulnerable and poor, who are most at risk in weather such as this.

Of course we know that certain of our plants will be decommissioned. Of course we need more storage, but much has already come on-stream and much is in the planning process. We need to ensure that that planned storage capacity can be turned into reality around the country. The new access to liquid petroleum gas in Milford Haven and the Isle of Grain, which, to be fair, the Secretary of State mentioned, has given us a whole new opportunity, and that trend is likely to continue.

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Photo of Stephen Crabb Stephen Crabb Opposition Whip (Commons)

I think the hon. Gentleman means liquefied natural gas. Can he explain why, at the 2005 general election, his party opposed the LNG developments in Milford Haven, and can he tell us where the extra 10 per cent. of gas supply going into the grid today from those two terminals would be if the Liberal Democrats were running energy policy?

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Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I can give the hon. Gentleman-my friend-an honest answer to his first question. No, I cannot explain that, and I am not going to try. It seems to me that, in retrospect if not in advance, it was clearly a good idea. I have certainly never opposed it, and nor have my colleagues on the Front Bench.

We live in a changing energy world involving different sorts of imports and different sorts of access to imports, and-again, the Government have understood this-new sources are likely to come on-stream. Last Friday's announcement by the Government about offshore wind was extremely welcome, and, as has been pointed out by my hon. Friend John Thurso, we have a fantastic opportunity to achieve world leadership in tidal power in the Pentland Firth. If that opportunity were developed to the full, this country could have the capacity for the most resource from tidal power anywhere in the world, not just for our own use but also for export purposes.

The Liberal Democrats do not believe that we need the nuclear option as part of the energy security mix. That is a known position, although obviously there are differences of view in our party as in others. Our belief is based not least on evidence that in other countries nuclear is normally, if not always, delivered late and very expensively, and that the same would be the case if it were developed again in this country. I have to say that I still do not understand the Conservatives' position on the nuclear industry. It appears to be supportive when we listen to some Conservative Front Benchers, but entirely opposed when we listen to their environmental and energy advisers. No doubt the Conservatives' position would be equally complicated if they were to gain any form of majority after the next election.

We are certain that microgeneration will also add to our capacity. It is small at the moment, but there is a consensus that it has huge potential. I believe that if the Government had an appropriate feed-in tariff they could encourage microgeneration, and we hope that that will happen.

The other side of the equation is that the energy security issue would have been much better addressed had the Government succeeded in the area in which I believe they have failed most. They have not helped people to reduce their demand and need for energy. The fact is that 99 per cent. of homes are not properly insulated to independently established standards. Despite all the protestations, we do not yet have a comprehensive scheme for warm homes in our country. We know what a great difference proper insulation would make, yet the Government have failed abysmally on a measure that my party has been arguing for 25 years is the most important way in which we can become more energy efficient, because reductions in demand and consumption have as great a part to play as anything else. Gearóid Lane is managing director of British Gas communities and new energy, and the following quotation is taken from an article he wrote for this month's Parliamentary Brief:

"We have just completed what we believe to be the largest ever piece of customer energy consumption research, analysing 64 million meter readings between 2006 and 2008 and correlating consumption savings with actions customers have taken to improve the energy efficiency of their homes. For example, after separating out the impact of price and weather, our data shows a reduction in gas consumption of 18 per cent. for the customers every year for whom we install insulation, and a 21 per cent. fall in gas consumption for the 100,000 customers every year for whom we install a new boiler."

The real prize in energy efficiency-and thus in reduction in consumption-will be won if all our homes, schools, hospitals and industrial and commercial buildings are properly insulated and we did not waste so much of the energy that we consume. That is where the Government have failed most, because we still have a very partial, piecemeal and inadequate programme for achieving those goals.

Obviously, we are always going to be interdependent with other countries around us and throughout the rest of the world. Our energy security is dependent on what happens in the rest of the world, and, sadly, there have been some disastrous actions in recent years. The invasion of Iraq has been harmful in this regard, as it had a knock-on effect on energy supplies; oil production in Iraq is now up, but not up to pre-war levels. There is also a lack of support, certainly from the Conservative party, for a European energy policy co-ordinated in such a way as to bring us all together. From what I have heard from the hon. Member for Tunbridge Wells, his party's ideas are entirely inappropriate to meet the challenges of the next decades. The Liberal Democrats believe we need not only to be firm in dealing with emissions and climate change, because we must have a zero-emissions policy and a carbon neutral, or zero-carbon, future, but to have an integrated European future. If we are really going to achieve energy security, we not only have to produce as much of our own energy as possible, but we have to be enthusiastic leaders in the campaign for a European supergrid so that the energy produced throughout Europe-whether from solar power in the Mediterranean, hydroelectric power in Norway, tidal power in Scotland, or renewables throughout our country-can be shared to give us all collective security. The UK should aim to be more energy independent, but the best security for all of us is for the whole of Europe to become energy self-sufficient. That is what will give us the security we need. If the Conservative party were a bit more enthusiastic about Europe in this context, that might give consumers and industry a little more hope of the prospect of a secure future if-although I do not think this will happen-it were to form the Government in the near future.

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Photo of Malcolm Wicks Malcolm Wicks Labour, Croydon North 5:48 pm, 13th January 2010

Understandably, the context for much of this debate has been the appalling conditions facing our country this winter, and we should remember the elderly at risk from the cold. We often talk about global warming, but many of our elderly would say that the chance of warmth would be a fine thing in their living rooms and bedrooms this winter. That is an urgent social issue. However, I want to begin my remarks by talking about energy security in the longer term and by dealing with the matter in a global context.

When the world comes out of economic recession, the global demand for energy will resume its previous trajectory and, depending on our success in respect of climate change, the International Energy Agency estimates that global energy demand could increase between 20 and 40 per cent. by 2030.

History is playing a trick on the British isles. At this time of globally increased demand for energy from the great emerging nations of India, China and the rest, we are moving to a position of much greater import dependency. For our country that represents not just a challenge in relation to energy supply, but a challenge that has implications for our foreign policy. When we talk about energy security, what do we mean? We should mean not just the important issue of where we get the stuff from. We should talk about our need for energy security with imports, which does not jeopardise our capacity to have an independent foreign policy that takes account of human rights and democracy, including in the countries that will be supplying much of our energy.

When Tony Blair as Prime Minister said that energy policy and energy security in the 21st century could become as important to a nation's defence and security as conventional armed forces, he was at least raising an important hypothesis for us to discuss.

During the debate we have considered some of the trends affecting our country. Yes, there is a great deal of resource still in the North sea-much to be explored in the future west of Shetland, and so on. Nevertheless, our gas and oil from the North sea are in decline by some 6 or 8 per cent. a year. That is a fact of life, although we must do our best to push the line in the right direction. Meanwhile, our nuclear energy capacity has declined from 30 per cent. at its peak to about 15 per cent. today. We know the story of coal and the missed opportunity there in an earlier generation. Our renewables are contributing more and more each year but still a very small percentage.

We must be as smart as we can in our foreign policy on energy so that we are in the game of diversity, as the Secretary of State says. We must not be over-dependent on any one fuel. We must avoid the dangers of a new dash for gas, which seriously concerns me. We should not source too much of our energy from any one company, region or country. We should build up our links with countries that are important to us, such as Qatar and in particular Norway. With the right approach, we could secure more gas from Norway.

We need diversity, and we need to ensure that in future, despite the trend towards import dependency, we secure as much of our energy indigenously, from within the British isles and our seas, as possible. That is a recipe for the Secretary of State's policy on renewables. The development towards 15 per cent. of our energy coming from renewables by 2020 is as much about energy security as it is about climate change. The two go together.

There is a role for coal. To ignore coal would be a national security disaster-hence colleagues talk perfectly properly about the importance of carbon capture and storage. Nuclear must play a key role. It is important for climate change and for the nation's security. In my report to the Prime Minister, to which the Secretary of State kindly referred, I go as far as to say that if by 2030 some 35 to 40 per cent. of our electricity was coming from nuclear, that would be sensible for the nation's security as well as for global warming. There is far more that we can do to reduce energy demand, not just in housing but across the industrial process and in transport.

In the final few minutes available to me, I shall turn from that macro perspective to a much more specific perspective on gas. As I said, I fear that there could be a new dash for gas, partly because gas power stations are far easier to build than nuclear and some other kinds of power stations. That needs to be avoided. Gas is an important part of the mix, but it should not be over-dominant. There are issues about gas supply in the UK that I set out in my report to the Secretary of State and the Prime Minister, which I know the Government are taking seriously and to which they will respond in due course. I do not expect a response today.

One such issue is that, compared with many of our continental partners, we have a relative lack of long-term contracts for gas. Companies tend to buy short-term, or sometimes "spot". Is that a problem? When we say that companies have a supply obligation, what does that really mean? In the course of the inquiry for my report, I found that the supply obligation is a bit like jelly-difficult to get to grips with. My understanding, and that of those who advised me, is that in our present system there is no way for National Grid or the regulator to establish whether, in aggregate, there is likely to be sufficient availability of gas during any one year or any one winter. That does not mean that the gas will not be there, because companies might buy "spot" or short-term, but it is not a very secure position. Having been Minister for Energy and having had to take my share of responsibility for these things, I found myself rather less confident about some of this than the Liberal Democrat spokesman-that is a bit strange, is it not? When I did my report, that raised in my mind some serious issues about what we mean by the supply obligation. The regulator is looking into that, as is the Secretary of State, but we need to consider it carefully.

My final point is about gas storage, which is a more complex issue than those on the Opposition Front Bench-perhaps both Front Benches-fully understand. The Secretary of State said that there are arguments against strategic storage, and I understand that; but there are arguments for it, as well. It is a question of balance. If we simply go in for commercial storage, we must recognise that much of it is owned by German companies and in certain winters some of it, from places such as Rough, flows towards the continent. How do we secure in extremis-in emergency conditions-the stored gas that can be used first and foremost for British business and British homes?

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal 5:56 pm, 13th January 2010

I refer the House to my declaration of interest.

I very much take on board the Secretary of State's remark that we want the facts and a robust analysis. That is why I start by repeating what I said earlier-that I congratulate him on changing the way we look at these things compared with the 10 years that preceded the last White Paper. The trouble was that we were working on the basis of a White Paper without any figures-nearly all the dates and targets had been removed, with only the 50-year one left. We therefore had a situation in which nobody could have their feet held to the fire because nobody had a target that was serious and could be kept to. I honour the right hon. Gentleman very much-this may be embarrassing for him-because he has changed the whole atmosphere and we can now have a proper debate about energy in a way that was not possible for a long period. He is suffering for that, and so are the rest of us.

Starting on a personal level, I recently had a problem in my constituency that arose because somebody on the Army base did not fill a tank, which meant that a lot of my constituents did not have any gas. That was nothing to do with a national problem or any of the arguments that we have heard today, but simply a local problem. When we talk about energy security, let us realise that there are some local issues, as well as national ones, and that they are very serious for people.

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.

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Photo of Elliot Morley Elliot Morley Labour, Scunthorpe 6:04 pm, 13th January 2010

It is a pleasure to follow Mr. Gummer, and I welcome this debate on energy security. However, I was surprised about the alarmist headlines about eight days' supply. Greg Clark generally makes a reasoned and well balanced contribution to such debates and there are real issues to address, but I agree with 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.

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Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

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?

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Photo of Elliot Morley Elliot Morley Labour, Scunthorpe

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 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.

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Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells 6:11 pm, 13th January 2010

I am pleased to follow 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 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, 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.

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Photo of Alan Simpson Alan Simpson Labour, Nottingham South 6:16 pm, 13th January 2010

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.

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Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

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?

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Photo of Alan Simpson Alan Simpson Labour, Nottingham South

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 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.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

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.

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Photo of Alan Simpson Alan Simpson Labour, Nottingham South

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.

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Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South 6:23 pm, 13th January 2010

I declare an interest as an adviser to the South Hook LNG terminal, which has featured in this debate today. It is a hugely significant development, and it comes as no surprise that it was opened by Her Majesty the Queen and his excellency the Emir of Qatar earlier this year.

We have to put this debate into context. We are going through the worst winter in decades, and in the past few days, leaving aside the debate about storage, there have been shortages. As the Secretary of State said, there have been problems with the Troll field, and demand has soared at the same time. The fact that the lights are still on is due to the investment in LNG, not just at Milford Haven, but with the British Gas terminal on the Isle of Grain. That is why things are still going ahead. Those two terminals are now supplying 10 per cent. of the UK's gas. Without that storage and capacity, the lights would be off, we would be on a three-day week and the Labour party would be at 20 per cent. in the opinion polls.

The Secretary of State said that the Government had been proactive in that development. Of course they have. They have been good about it. However, the initial decision was a financial one made about seven or eight years ago. Investors did not do that just because they were concerned about the UK's energy position; they did it because they wanted to make money. The price signals at the time looked good, but now they do not look so attractive. That is why the Opposition motion's call for a new framework to attract the necessary investment is so necessary. I am astonished that the Government do not accept that part of the motion in their amendment.

We have to look at this debate in a global context, and in that respect there are four statistics that are very relevant indeed. The first is that oil and gas will remain the primary source of energy and that, together with coal, they will supply 85 per cent. of global energy needs in 2030. Secondly, by 2020, energy consumption by the developing world will overtake consumption by the industrialised world. Thirdly, natural gas is the fastest growing primary energy source. Fourthly-this is a statistic on which I differ from my constituency neighbour, Malcolm Wicks-global growth in electricity demand will grow by 55 per cent. by 2030, which raises the question whether low-carbon policies can match that growth.

The key issue to arise from all that is that in the years to come, there will be a seller's market. There will be greater competition for equipment and skills, which will cause serious problems for electricity producers. The key questions for policy makers are these. Will the investment meet the growth in demand? Is nuclear power part of the answer? There is a consensus that the answer to that is yes. Should we bet the house on renewables? Probably. Will the grid cope? Perhaps. Who will pay for that? A lot of uncertainty is caused by those factors, and that influences the debate.

On infrastructure, there remains the issue raised by Mr. Weir, the spokesman for the Scottish National party, about the grid connections. We need financial incentives. Planning is now resolved, but where are the policies on tariff structures, renewable credits, CO2 pricing, construction capacity, and fuel and site availability? All that produces a huge amount of uncertainty, which explains why so little new generating capacity has been produced over the past five years. There is now just 6.8 GW of capacity under construction, 5 GW of which will come from gas. We have planned, in the pipeline between now and 2016, consent to build 11 GW of capacity, of which 8 GW will come from gas.

With 15 GW of generating capacity dropping out in 2015, I would say that we need all that capacity. There will be a large dip in capacity, so my advice to whoever forms the next Government would be to ensure that creating that extra capacity becomes their No. 1 policy priority. There is a huge amount going on, but if the market does not respond, the Government will have to become far more interventionist than they have been so far.

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Photo of Mark Hendrick Mark Hendrick Labour, Preston 6:28 pm, 13th January 2010

The world is facing a resource crisis. The global population is expected to increase to 9 billion by 2050. Not only is the world increasing in population; it is becoming richer. As nations such as India and China enjoy economic growth, their citizens want and can afford to consume like we do. In China, for instance, the number of cars will increase from 4 million in 2000 to 130 million by 2020. However, as demand increases our resources are becoming even scarcer. Oil and gas supplies are becoming more costly to extract. The price of oil might have dropped from the eye-watering peaks of 2008, but it has risen again quickly, to approximately $80 a barrel today.

The European Union's dependence on foreign fuel is also rising. Europe is now the world's biggest importer of energy and the second largest consumer. Europe depends on just three countries-Russia, Norway and Algeria-for nearly half its supply of gas. As has been said in this debate, there have been concerns in recent years that Russia would use that control for political purposes.

In addition, we face the constant threat of global terrorism. Al-Qaeda has threatened to attack what Osama bin Laden calls the "hinges" of the world economy, of which energy is the most crucial. The resource crisis means that the main production sites are the sources of rising tensions. About a third of the world's civil wars are in oil-producing states. Economic power is also shifting to oil and gas-rich states and the elites within them. As Thomas Friedman has argued, soaring oil prices strengthen anti-democratic regimes.

We know that energy production is a major contributor to climate change. It is therefore impossible to discuss energy without referring to the impact on our environment, and ultimately on human welfare. As it is such a huge part of the climate change problem, energy must be at the heart of any solution.

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Photo of Stephen Crabb Stephen Crabb Opposition Whip (Commons)

The hon. Gentleman has been making some quite alarmist comments about imported energy sources. Does he recognise that the real stresses on the UK energy system in recent years have come from problems such as the Buncefield explosion, the fire at the Rough gas storage facility and, in recent days, ice in the pipelines that connect us to the Norwegian gas field? Those kinds of problems are the immediate challenges to UK energy security, not the threats from terrorists that he is talking about.

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Photo of Mark Hendrick Mark Hendrick Labour, Preston

I remind the hon. Gentleman of the comment of a Conservative Front Bencher: we should expect the unexpected.

To address the twin challenges of energy security and climate change, the UK must implement various measures. Energy must be used more efficiently and we should have a diverse supply of low and zero-carbon energy sources. It is reported that International Energy Agency analysis suggests that serious action on climate change requires a

"complete transformation of the energy sector...in all countries".

It is important that we should act as part of a united Europe. It is in the interests of all major consumers to have a predictable and rules-based approach to managing energy security and climate change. It is only through co-ordinated action with our European neighbours that we can achieve that. For example, Russia is dependant on Europe as a consumer market, with 80 per cent. of its oil exports and 60 per cent. of its gas exports coming into the EU. It is essential that Europe acts collectively to maximise that consumer influence. Similarly, Europe will have the weight to negotiate with China, India, Japan and the USA only if it is a united Europe. Indeed, we recently saw action of that kind at Copenhagen.

Energy has been at the heart of the European Union since its conception, and it remains there today. In 2007, EU leaders recognised the twin challenges of climate change and energy security, and agreed to some laudable goals on energy usage, renewable energy and reducing emissions. Europe also co-operates on investments, technology transfer, mutual access to markets and predictability in commercial relations, particularly with countries such as Russia and others in northern Africa, the Gulf region and central Asia. The UK has played a central role in shaping that European action and is at the heart of international agreements. I join other hon. Members in welcoming the plans to develop a European supergrid.

A great deal of progress and development is required on clean coal and on carbon capture and storage. I know that energy efficiency is high on the Government's priority list, but we have to do a great deal more to make homes more efficient. I welcomed the Warm Front programme, which did a lot to insulate homes. In my constituency, 8,000 homes received loft insulation, double glazing and other measures to improve energy efficiency.

It will not be easy to switch to being a low-carbon economy. That change will force nations to co-operate and will require unprecedented development and use of existing and new technologies. Renewables, nuclear power and carbon capture and storage will all come into the equation. All that will cost about £10.5 trillion globally between now and 2030, but those costs will be vastly outweighed by what we will reap in environmental and energy security.

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Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs) 6:34 pm, 13th January 2010

Several speakers have talked about the oil and gas industry in the North sea, but I would caution Members about writing it off. The Energy and Climate Change Committee report shows that this industry still has a future, not only because there is a large amount of oil and gas in the North sea, but because there is an opportunity to use the skills developed in the North sea to move forward into renewables industries, particularly offshore wind and tidal and wave power, which could be the key to much of our energy for the future.

I agree with what Malcolm Wicks said about the dash for gas. Generating electricity might well not be the best use of our gas reserves, but the fact is that gas is a major part of our electricity generation at the moment. Under current proposals, 33 gas plants have received planning permission but are not yet in operation and another nine are under consideration, totalling about 15 MW already planned to come on stream. They will play a considerable part in our energy provision for the foreseeable future.

In Committee, I proposed an amendment to the Energy Bill to try to get the Government to look at gas combined capture and storage. The Government opposed and defeated it. I entirely understand the Government's wish to concentrate on coal in the first instance, and I understand, as do all members of the Committee, the need to get CCS for coal, but I do not understand the refusal even to consider gas for the near future. Given the amount of gas that we still use in generation, it seems to me that it is going to be part of our energy mix for the foreseeable future, so we are going to have to decarbonise gas as well. Even at this late stage, I ask the Government to think again.

In the remaining few minutes, I want to concentrate on the vital issue of transmission charges, which I raised in an intervention. If renewables are going to play a major part in our energy mix, we will have to deal with this matter. The Government have rightly announced ambitious plans for offshore wind farms, but that energy has to come ashore, get into the national grid and be transmitted to the areas where it will be used.

The current transmission regime was developed for a grid where power came from big coal, gas and probably nuclear stations, which were often located near the main centres of population, but it is not fit for a new century of renewables, when energy sources are in much more remote areas and there are greater difficulties in getting that energy into the national grid.

The locational charging methodology used by Ofgem levies higher charges on generators furthest from the main centres of demand, which generally favours those in the southern part of the UK over those in Scotland. Indeed, it has been calculated that transmission charges are £21.58 per kilowatt-hour in the north of Scotland compared to an effective subsidy of £6.90 per kilowatt-hour in London. That is a lunatic system when we are looking to develop renewables. As a result, Scottish generators produce 12 per cent. of UK generation but account for 40 per cent. of the transmission costs-about £100 million a year more than their fair share.

Wind is not the only issue here. For example, there are huge opportunities in the Pentland firth for tidal power, but we need the infrastructure to bring that power into the grid. It is not a case of putting the cost on the developer; the matter should be part of a national plan for renewables. Only last weekend, a considerable amount of controversy arose over suggestions that National Grid might be thinking of doubling or tripling charges to the islands, although it has been denied.

Will the Minister look seriously at instructing Ofgem and National Grid to undertake an objective and open analysis of the impact of locational charging, broken down by each part of the UK and by type of generation for both current and future generation mix scenarios. That should address the key question of how much more productive or competitive a renewable project in Scotland has to be to offset the impact of a locational charge. Alternative models of charging should be considered, particularly the post stamp model, which would be in the national interest as well as in the interests of generators in Scotland. If we do not get this right, I greatly fear that we will end up-

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Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change) 6:39 pm, 13th January 2010

This debate has been all too short, but we have had some absolutely excellent contributions. They have been thoughtful, constructive and well informed, showing the House at its best in terms of the expertise that it can bring to incredibly important and relevant debates such as this. The only sadness is that, as a result of its timing, we have not been able to hear from more right hon. and hon. Members. However, the contributions that we have heard have been constructive and relevant.

Malcolm Wicks, a former Minister, spoke with his usual authority. So he should do: he was Energy Minister No. 7 and No. 10 of the 15 whom there have been since the Government came to power in 1997; and based on his speech he could be Minister No. 16, too. He brought to bear his global view and understanding of the issues in a constructive and helpful speech, and he was justifiably frustrated by the fact that we have not seen the report that the Government should have published in response to his helpful and constructive paper. I hope that that response will be forthcoming.

My right hon. Friend Mr. Gummer showed his expertise and understanding of the issues, and he delivered a clear wake-up call when he talked about the areas where progress is not fast enough. They include smart metering, smart grids and the drive to renewables and energy efficiency. I assure him that, although we recognise that in the European Union energy is a retained power, we totally understand the need to co-operate and work with our European partners to ensure the energy security that is necessary in a changing and challenging world.

Mr. Morley talked about the need for diversity and rightly reminded us of the importance of fuel poverty in this debate, because there is a direct link between the security of supply and fuel poverty. Security of supply challenges do not necessarily just lead to power cuts; first, they lead to price spikes, which are damaging for consumers, and particularly for businesses.

My right hon. Friend Mr. Heathcoat-Amory also put the matter into a global context and talked about the international challenges that we face, including population growth. However, he reminded us clearly of the wasted opportunities and the lost years-the years when things could have been done to prepare us for the situation that we face today. Those opportunities were missed.

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Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

I hope to be forgiven if I do not give way, because we have been very short of time in this debate. If there is time towards the end of my contribution, I most certainly will give way, because I know that the hon. Gentleman has been here, waiting very patiently, throughout the debate. In fact, as he has been here so patiently throughout, I shall give way.

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Photo of David Anderson David Anderson Labour, Blaydon

The hon. Gentleman talks about the lost years, but what about the lost years of the 1980s, when the Conservative party devastated the coal industry, privatised the utilities and left us with the mess that we are in now?

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Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

I knew that my instincts were right: I should not have given way to the hon. Gentleman. In the 1980s, we set the market framework that delivered the cheapest energy prices in Europe for the next 20 years. The model has worked, and it has been pretty robust up to now.

We heard from Alan Simpson, who will be a great loss to this Chamber when he steps down as a Member. He made a very thoughtful and visionary speech on themes that he has made his own during his time in the House, and he described his concern to ensure that feed-in tariffs are set at the right level. We share his concern, because we had to work very hard to put those tariffs on to the statute book, and it would be a tragedy if they were set at a level that did not deliver the benefits that we hoped for.

My hon. Friend Richard Ottaway rightly focused on the investment that has been made and the vital contribution that liquefied natural gas terminals have made to our energy security. We heard a very thoughtful speech from Mr. Hendrick, and Mr. Weir brought us back to gas when he talked about carbon capture and storage. We supported him in a Division on the issue in the Energy Bill Committee yesterday, and I am sorry that we could not persuade the Government to take a broader view on CCS and help Britain take a big step forward in that area.

Much of this debate has, understandably, focused on gas storage. The Secretary of State talked about the issue, saying that we have the lowest prices in Europe, but if there were more gas storage, there would be greater price benefits to our consumers. Gas could be bought in the summer, when it is cheaper, and sold without big price spikes in the winter. There is a link between storage and pricing.

The Secretary of State also referred to the recently published national policy statement, as if that will put right gas storage. We have done a quick check, and of the 675 pages of policy statement that the Energy and Climate Change Committee is going through, seven-1 per cent. of them-relate to gas storage. That is not quite the commitment that we are looking for.

We have to recognise that all is not well. At the maximum level of gas storage in this country, we had 16 days. Last week, my hon. Friend the Member for Tunbridge Wells pointed out that we had eight days maximum storage left, and today it is down to six. Part of the problem has arisen because the Langeled pipeline has not been working at capacity, just as part of the problem four years ago was the fire at the Rough storage facility. There are no grounds for complacency because of the external pressures that are creating a real problem of demand. This is the third time in four years that we have been down to a few days of gas storage. Indeed, if it had not been for the recession-with demand overall down by 5 per cent. and industrial demand down by 15 per cent.-there is no doubt that we would be in very difficult circumstances now, and possibly having outages.

We are in the strange position that the electricity interconnector with France is still exporting 2 GW of power at a time when our own industrial users are being asked to switch off their gas. That is something that the market decides that it wants to do, but we would be much more comfortable about that if we had more gas storage and knew that our industrial users would be able to work when they wanted to do so.

Much of the rest of the debate dealt with the issues of electricity generation. In the Secretary of State's opening remarks-I am sorry that he is not in his place-he talked about the need to focus on the facts. He talked about wind, but he did not mention the need for massive back-up to make wind power reliable. In this cold spell, one fifth of 1 per cent. of our electricity has come from wind, which shows the extent to which back-up is necessary. He spoke about offshore wind, but he did not mention the fact that we are potentially losing some of the best companies in the country, such as Aquamarine and Pelamus, which are now looking to invest in the US and Portugal, because greater support is coming from their Governments. Nor did he mention the problems with the supply of ships, cranes, skills and funding-and apart from those problems, everything is going really well! The Secretary of State talks about the positive aspects, but he does not mention the challenges.

The Secretary of State talked about nuclear, but he did not really comment on the fact that Vincent de Rivaz, the chief executive of EDF, said this week that the key driver of investment will be a floor price in carbon. What is the Secretary of State's position on that? On carbon capture and storage, he did not talk about the need for a real Government vision on the investment in pipeline infrastructure and a body to ensure that we co-ordinate the work in that area.

The Government's approach has been characterised by a mass of ambitious targets that sound good, but we have no road map for getting there. There is a road map for nuclear, but on everything else nobody knows who is responsible for doing what and when in order to meet the targets. That has led to Ernst and Young saying that we need £200 billion of new investment in our energy infrastructure over the next 15 years-£50 billion in the next five years-because of the failure to secure that investment in the past.

We face a real challenge and a significant wake-up call. Several things have happened today that reinforce that point. Alistair Buchanan, the chief executive of Ofgem, has warned that Britain's gas market faces a "cliff edge" in 2015-16 that could cause supplies to run short by the end of the decade. Some of Britain's largest businesses have written to the Financial Times to say:

"The bottom line is that the UK was unable to meet the needs of all consumers...As a nation, we need to take security of our energy supply more seriously."

It has also been announced that half the members of the Chemical Industries Association say that increased gas storage is essential to future investment by their companies in the UK. Reuters is even quoting an unlikely source who should know the facts, who said today:

"There is clearly an urgent need for additional gas storage in the UK".

We welcome the Secretary of State to the cause.

The truth is that the Labour party has always been the party of energy insecurity. In the 1980s, it opposed the building of Sizewell B. In 1997, it was elected on a commitment to move away from gas to coal just as our coal production was beginning to decline and imports were increasing. In 2003, the Government ruled out nuclear as having any role to play in future energy policy, only to reverse that decision four years later. They have known for years about the amount of our capacity that will be decommissioned, but they have failed to secure the new investment. This debate is not just about the challenges of this week, but the longer-term issues facing our nation on which the Government have been found wanting.

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Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change 6:50 pm, 13th January 2010

I, too, agree that this impressive debate has shown the House at its best; the contributions, coming from people with great knowledge, forcefulness and passion, have been superb. I know that some people who wanted to speak have not been able to. My hon. Friend Mr. Reed failed to have an intervention accepted by Greg Clark. My hon. Friend is a superb and unique representative of his constituents and a person with great knowledge of the nuclear industry, and we would have benefited from his contributing to this debate. The same could be said of my hon. Friend Mr. Anderson, who got in with a couple of telling interventions about the coal industry. He is a doughty champion for the coal sector in this country.

I pay tribute to and thank our energy sector and its workers for ensuring that energy supplies have been maintained. Over the past 10 days, we have experienced severe weather and the most prolonged spell of freezing conditions across the United Kingdom for 29 years and there have been record levels of gas demand. The UK's energy system has coped well. There have been no unplanned interruptions to gas supply, despite the record demands. As has been widely reported, some industrial customers on commercially interruptible contracts had their supplies reduced temporarily. That was in line with commercial arrangements and is part of the normal working of the market.

That market has also worked well, with imports responding to the need for extra gas in the UK-I include liquefied natural gas and flows through the interconnector in that. In particular, I wish to thank the National Grid Company for its role in balancing the gas system during these challenging times. Let us not forget that the electricity infrastructure has also performed well, with the faults caused by the most severe weather on 6 January being quickly addressed and the supply restored-the last few customers had it restored over the weekend. The UK electricity industry has an excellent standard of service-the reliability for 2008-09 was 99.989 per cent. That typifies the robustness of the UK's energy system and we fully intend it to be maintained this year, next year and every year.

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Photo of Andrew Pelling Andrew Pelling Independent, Croydon Central

My point is not weather-related. Unfortunately, my constituents have been suffering from a periodic set of power cuts. It is particularly frustrating when Christmas day is spoilt for Croydon residents because of power cuts, and on 4 January, more than 4,500 residents lost out. Does the Minister think that perhaps more should be invested in maintaining the system and that perhaps the return on equity for EDF in London is too high?

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Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I assure the hon. Gentleman that I will make inquiries on that point and see whether I can say more after I have the facts.

Our plans commit us to tackling climate change, ensuring security of energy supplies and keeping energy costs affordable. We want to ensure that all consumers have a fair deal. As everyone in the debate has said, the key to security of energy supply is diversity of energy supplies and sources. Last July's transition plan outlines how nuclear power, alongside a sevenfold increase in renewables and investment in clean fossil fuels, will help us to achieve a low-carbon future and secure the UK's energy supply.

I shall say a little more about those customers. We have heard about some worrying incidents relating to elderly people who were concerned about the cost of keeping their homes warm. Simon Hughes talked of people who were frightened last week by scaremongering stories in the media from the Conservatives and of elderly people feeling that they could not keep their heating on. That is an appalling state of affairs and we need to send the message from this Chamber that people must keep their heating on during this dangerously cold weather. My hon. Friend Alan Simpson reminded us of the personal cost behind the statistics on excess winter deaths. I assure the House that the Government are determined to do all that we can to eradicate fuel poverty in this country.

Many people pointed out the obvious fact that the more energy use we can avert, the greater our success will be in cutting carbon emissions, assuring ourselves of energy security and, of course, cutting our energy costs. The Government take seriously the need for energy efficiency in many fields. One is transport, an area of policy that has not been covered, perhaps for understandable reasons, but in which there are great gains to be made through energy efficiency. Another is domestic properties, and millions of people in this country have been helped to insulate their homes by schemes such as the Government's Warm Front and the suppliers' obligation, currently called CERT-the carbon emissions reduction target.

Let us not forget the contribution that commercial businesses need to make to avert costs in energy and reduce their carbon emissions. We help with expert advice, interest-free loans and mechanisms such as climate change agreements and the emissions trading scheme. Mr. Gummer, who is no longer in the Chamber-

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Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

Ah, there he is! Thank you.

The right hon. Gentleman mentioned the carbon reduction commitment energy efficiency scheme that begins in April. I take to heart his comments about the design of the scheme and about who will be admitted to it, but the truth is that some of the largest emitters of carbon will be entered into the scheme and they will cut their carbon emissions as well as making savings on their energy bills.

Many hon. Members referred to the contribution of renewables, including my right hon. Friend Mr. Morley and my hon. Friend the Member for Nottingham, South. Most of those who spoke in the debate gave a warm welcome to last week's announcement of the round 3 offshore wind licences. This country was already the world leader in connected energy from offshore wind, and our performance in that area is now putting a considerable distance between ourselves and the rest of the world. But we do not rely solely on wind as a source of renewable energy, important though it is. There is also biomass, hydro, solar, heat pumps and many other sources that we promote. I noted the considerable enthusiasm around the Chamber for microgeneration, and a general welcome for feed-in tariffs, which at long last will begin in this country this April.

Many hon. Members also referred to the contribution of nuclear, including the right hon. Members for Wells (Mr. Heathcoat-Amory) and for Suffolk, Coastal, Richard Ottaway and my right hon. Friend Malcolm Wicks. I have already said that my hon. Friend the Member for Copeland would have liked to contribute to the debate on nuclear. I remind hon. Members that we have put in place the legal framework for new nuclear, including provisions on payment for the storage of waste and on decommissioning, and the planning changes to ensure that the process will be quick. The economic environment that we have put in place has already enabled three consortiums to commit to building new nuclear power in this country that will produce 16 GW of energy.

Many hon. Members mentioned the importance of carbon capture and storage. What is so crucial about CCS is that, as we invest more and more in renewables, which produce electricity for the national grid intermittently, we will need the back-up that reliable sources such as coal and gas can offer. The consequences of their carbon emissions are too great to contemplate, however, without a means of abating those emissions. That is where CCS will be so important, which is why it is good that our Government are now committed to four CCS demonstration projects on a commercial scale.

I would have liked to spend longer talking about all the points that hon. Members raised. I agree with my opposite number, Charles Hendry, that it has been such a good debate that it deserved more time. I started by thanking all those who have worked to ensure that our energy supplies were maintained during the period of severe weather. It has brought home to us how valuable the jobs of today's energy workers are, but I should like to address my final remarks to the energy workers of tomorrow. Let me point out to today's schoolchildren, students and young men and women that these are vital jobs to be filled. They will help us to save the planet and to keep this country's energy secure and affordable. They will be skilled, well-paid and highly respected by others. What more incentive do those young people need in order to sign up?

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Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

The House divided: Ayes 182, Noes 355.

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Division number 38 Opposition Day — [2nd Allotted Day] — Energy Security

Aye: 182 MPs

No: 355 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

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Question accordingly negatived.

Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.

The House divided: Ayes 285, Noes 173.

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Division number 39 Opposition Day — [2nd Allotted Day] — Energy Security

Aye: 285 MPs

No: 173 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

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Question accordingly agreed to.

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).

Resolved,

That this House 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.

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Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

On a point of order, Mr. Speaker. My hon. Friend Dr. Murrison asked an important question about western Sahara at Prime Minister's questions. In his answer, the Prime Minister stated:

"The one thing that we have tried to do is increase-indeed, double-our aid to these areas".

I had a debate in Westminster Hall on aid to north Africa, because I feel passionately about the region. Department for International Development aid to north Africa has fallen from £3.5 million in 2003-04 down to £500,000 in 2005-06, and to £0 in 2007-08. When spending by other Departments is included, aid to north Africa was £38 million in 2003-04, falling to just £2.8 million in 2007-08. Could I ask you, Mr. Speaker, whether you could ask the Prime Minister, before he makes these replies, to get his facts straight?

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons

I am grateful to the hon. Gentleman for his point of order and for his courtesy in giving me advance notice of it. The clue to the answer to his question lies in his reference to a debate that has taken place. I say to the hon. Gentleman that this is essentially a matter of debate-hotly contested debate, I might add. He has placed his views on this matter, and his views of the Prime Minister's stance on it, very firmly and clearly on the record.

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