14:30 Roger Gale (Conservative)

Thank you for that clarification, Mr Gale. I know that it will be welcome to members of the Energy and Climate Change Committee, who regard the reports as separate and would prefer to have two separate debates, and it is helpful of you to accommodate us. I shall begin by drawing attention to my entry in the Register of Members’ Financial Interests regarding a number of businesses that relate to the energy and transport industries.

Finally, we recommended that both the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs,

“in planning to decarbonise the energy sector DECC should generally be cautious in its approach to natural gas”.

There are five main studies on the greenhouse gas emissions of shale gas. Two say that shale gas emissions could be higher than those of coal, while the three others debunk that analysis and conclude that shale gas is only slightly worse than conventional gas. Either way, the strong probability is that if UK shale gas reserves are exploited, significant new investment in gas-fired power stations will occur. Our report therefore concluded:

“The emergence of shale gas increases the urgency of making carbon capture and storage (CCS) technology work for gas as well as coal.”

Now that negotiations for the first proposed CCS demonstration project at Longannet have failed to reach agreement, the £1 billion set aside in the comprehensive spending review for CCS is available for other projects to be pursued. I strongly urge the Government to apply that to developing CCS for gas.

The decisions taken during this Parliament about energy policy will shape the UK’s energy infrastructure, especially its electricity generating capacity, for decades. The drivers of the policy remain security and independence, lower emissions, and price. Shale gas could help significantly by contributing both to improving our security and independence and to keeping prices down. In the short term, if gas replaced coal, it could also help to lower emissions, although without CCS, gas by itself cannot remain a large component of our energy mix beyond 2030 if we are to achieve the aim set out by the Committee on Climate Change of largely decarbonising the electricity generation industry by then.

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14:48 Dr Alan Whitehead (Southampton, Test) (Lab)

I took part in the Energy and Climate Change Committee inquiry into shale gas, and in the course of that inquiry, I took part in a number of visits, not just to the one site in the UK that is currently being drilled, but to areas where intensive drilling was going on, has been completed, is producing or—in many instances—has been abandoned. What I found particularly useful about those examinations of existing practice was that they not only helped us to consider the overall theoretical picture, but enabled us to see what a shale gas producing economy might look like in the UK, based on what we now know about the in-principle availability of shale gas in the various plays in the UK.

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15:20 Ian Lavery (Labour)

The seventh special report of Session 2010-12 outlines the work of the Select Committee on Energy and Climate Change and the Government’s response. The whole issue of shale gas needs much more detail and clarification on a range of fronts: there are the cost implications; there is the impact of exploration and production on the environment, which is an essential issue; there are the advantages and disadvantages of shale gas production and exploration; there is the carbon footprint; and there are the possible hazards. Having sat in Committee while witness after witness gave very good statements, we heard wide and varied views before we took the view outlined in the report.

The Energy and Climate Change Committee report tackles all those issues, as has been outlined already this afternoon. However, the World Wide Fund for Nature has clearly stated that shale gas is a fossil fuel and that

There is also carbon capture and storage, which has been mentioned. If we are to succeed with shale gas production, because of the problems with the environment and the emission levels, CCS must be pushed forward. We have a massive problem after the cancellation of the Longannet plant just two weeks ago. It has taken about six or seven years for that project to be ready to be signed, but it was cancelled at the eleventh hour. It is important that CCS is put back on the table. We have had excellent discussions with the Minister about CCS, and those discussions are continuing. In addition, experts say that the way in which shale gas is extracted largely depends on the emission levels. We did not get into too much detail on what that actually means, but it was certainly something that the experts said to the Committee.

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15:37 David Mowat (Warrington South) (Con)

I want to talk for a minute or so about gas in general, before I get into shale gas in particular. I want to put into context where we are in our decarbonisation targets. In 2010, 2.5% of the UK’s energy came from renewables and 90% came from fossil fuels. Of that 90%, the majority is still coming from what we would call the “dirty” fossil fuels, which are coal and oil. We have a long way to go. There was a debate on this subject recently and it was pointed out that the UK is 25th out of 27 countries in the EU in uptake of renewables. It is my judgment that gas has a role to play in decarbonising the economy. We may debate the matter later, but I believe that we have wrongly placed some efforts by confusing “decarbonisation” with “renewables”. Decarbonisation is necessary and it is a legal requirement. Some of the renewables targets might not always lead to us making the right decisions about how we decarbonise, and at what rate.

I have mentioned the decarbonisation of transport, and there is a lot of emphasis on electrification and the need for electric cars. That market is moving ahead in a way that this country might not have noticed, with well in excess of 10 million gas-powered cars in the world. Interestingly, the leading countries are some of the developing ones, such as Pakistan, which is making a big effort to decarbonise.

I certainly accept that the market will determine gas prices and that if the price drops to a point at which it is not viable to take the gas out, it cannot be done. It appears possible, however, for the US to exploit and develop shale gas for $4 per million cubic feet, compared with $10 here. That is the market price, because people are obviously making a profit at that level. I can see absolutely no reason why that would not happen in France and Poland, and indeed in Russia. The report interestingly misses out South Africa—it might just be that things are moving very quickly. The Department of Energy and Climate Change figures for worldwide unconventional gas show that South Africa has one of the larger residues.

The thrust of what I am saying is that we have to be careful with all these environmental issues, and we must, of course, bring people with us. The market will happen anyway, and it could be a significant game changer and a big assistance to the decarbonisation effort that we must make in the shorter—and potentially the longer—term. One reason why unconventional gas has perhaps had a slightly weaker profile than it might otherwise have done is that it has a lot of natural enemies. The green lobby does not like it because it is a fossil fuel, and it is worried that it will take our attention away from renewables, and big oil does not like it because it is not at the forefront of this as it has been west of Shetland, for example. I used to work in the industry, but had not heard of Cuadrilla until a couple of years ago—Cuadrilla and IGas are new companies.

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15:47 Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)

To risk moving into the subject of our second debate, that would have an impact on the Government’s electricity market reform proposals and some of the assumptions underpinning the various features of that policy. Gas emissions might be lower than those of other fossil fuels, but they will always be higher than those of renewables, and the fracking process is energy intensive. If, as the Select Committee report anticipates, the emergence of shale gas leads to a switch from coal to gas for electricity generation, and to new gas power stations being built close to source, the development of CCS for gas will become increasingly urgent.

However, that should not rule out or relegate the importance of CCS for coal following the Longannet decision a couple of weeks ago. Both are important, and there is a pressing need for urgency in Government progress on alternative demonstration projects in both coal and gas. As BP pulled out from the earlier iteration of a potential CCS project in Peterhead, I hope that the amended project, with SSE leading the consortium, will be considered as a viable option for that technology, given its proximity to deep storage sites in the North sea. What impact do the Government anticipate that the move to shale gas will have on the coal industry and the potential for clean coal? That would be interesting to know.

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15:59 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

It is a pleasure to serve under your chairmanship, Mr Havard, and to respond to what has been an excellent debate. It has been extremely balanced, thoughtful and constructive—words that are also applicable to the Chairman of the Energy and Climate Change Committee, my hon. Friend the Member for South Suffolk (Mr Yeo). The way in which he introduced the debate was helpful. As he said, the issue could not be more topical. It is very much in the news this week, and the way in which it has been debated in this House shows that we are all keen to understand the technology’s potential, but to also ensure that it is developed in a way that takes account of the highest standards in both environmental and safety legislation.

All onshore oil and gas projects, including shale gas exploration, require planning permission from the appropriate planning authority. The hon. Gentleman listed a number of issues about which he has concerns, but they are all already taken into account by the environmental consents that are necessary. He also asked about our contact with the Health and Safety Executive. The most important thing of all about the relationship with the HSE is that it is not accountable to me. The Department of Energy and Climate Change and I issue the licences, but we do not control the health and safety legislation; that is independent. It is a core part of our safety approach in the United Kingdom, and it comes under a different Department. We have a good working relationship with the HSE and need to understand its concerns, but I am not in a position to put any pressure on it—nor would I seek to—to meet other objectives.

Any applications are subject to environmental regulation by the relevant environmental agency—the Environment Agency in England and Wales, or the equivalent bodies in Scotland and Northern Ireland—and are subject to safety regulation by the HSE or its Northern Ireland equivalent. They also require specific consent from the Department of Energy and Climate Change before drilling activities can commence. My hon. Friend the Member for Southport expressed concern about the use in our response of the words “may” or “might”. The reason for that is that we do not take a cast-iron approach to every single application. Every single application will be judged on its merits, and if there are issues that require us to go further, we will of course do so. For every single licence application, we will be certain that the most stringent environmental applications and measures can be put in place.

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