14:30 Mr Tim Yeo (South Suffolk) (Con)

I draw attention to my entry in the Register of Members’ Financial Interests. In view of a lot of traffic on Twitter and on the blogs, I would like, if colleagues will forgive me, to clarify precisely what my interests are. I have two financial interests in the renewable energy field. The first is AFC Energy plc, a UK-listed company that I have chaired for five and a half years. It is developing a fuel cell to convert hydrogen into electricity for applications in static situations—in other words, not on vehicles. That company does not receive any Government help. Its business model does not assume that it will ever be eligible for renewables obligation certificates or feed-in tariffs. Its aim is to compete on equal terms with other forms of generation. I do not believe that, since I have been its Chairman, the Energy and Climate Change Committee has ever discussed the subject of fuel cells.

The second financial interest is TMO Renewables, another UK-based company, which is developing a second-generation biofuel. That company does not receive Government help. It does not plan to market its product anywhere in the European Union, so it is not affected by any UK or EU policy. The company is not seeking any subsidy from taxpayers or consumers. It is promoting its technology in the BRICs—notably in China and Brazil, and also to some extent in India. I would also mention that when the Minister for Universities and Science recently visited that company, it was not at my invitation. I was not informed of the invitation in advance; it was made by the staff. I deliberately did not attend that visit, although it resulted in an invitation for the company to take part in a Government-led trade mission shortly afterwards. I also have a non-financial interest in the Renewable Energy Association as that organisation’s first ever president, which is an unpaid post. When I took it on, I made it clear that I could not act as an advocate for the association or for any of its members. Finally, I have a financial interest in Group Eurotunnel SA, which is considering a joint venture that would involve the construction of an interconnector to take electricity to and from France.

I also point out that I have been a strong and consistent advocate of greater investment in renewable energy for almost two decades—ever since I first took an interest in climate change when I was rather unexpectedly given ministerial responsibility for it in 1993. I believe that Britain needs investment in many forms of low-carbon technology, which of course includes nuclear power, and the suggestion that my views on the subject could possibly have been influenced by interests that I did not acquire until 2006 is simply absurd.

Britain remains a big net importer of energy—the figure was 29% last year. We are very lucky to have Norway on our doorstep, which is a friendly and reliable supplier of gas, but it is still desirable that we try to minimise our dependence on imports. In my view, that supports the argument for exploiting our shale gas reserves, for which we look to the Department of Energy and Climate Change for early approval, as has been recommended by the Committee. We will soon return to that subject, and I hope that we get the go-ahead soon.

Norway is a friendly supplier of gas, but even that fact cannot insulate us from future gas price spikes. Those who advocate relying mainly on gas to generate our electricity must recognise not only that, without the so far unproven economic availability of carbon capture and storage, gas cannot possibly get us to the 50 grams per kWh emissions target set by the Committee on Climate Change for 2030, but that there is also a real danger, as the Asian economies continue to grow, that global demand for gas will drive prices up, meaning that Britain’s economy will become less competitive if gas is our principal source of electricity generation.

I am sure that the Committee is encouraged by the fact that the Minister keeps quoting from our reports. He could not have a better textbook from which to embark on his learning curve. The signal that we would like to see of a strong and stable carbon price is one that has been conspicuously absent from the EU emissions trading system, for a variety of reasons. First, the cap was originally set much too high in phase one, and phase two was scuppered by the recession. It will probably be the latter part of this decade, at the earliest, before we see that strong, stable carbon price emerging, but we will see it eventually. I would be surprised if, by the 2020s, we do not see a stable carbon price. Moreover, if more countries, including some large ones, adopt emissions trading as one of their instruments to address climate change, I suspect that the prospects for that strong and stable carbon price will be greatly increased.

I am listening with great interest to my hon. Friend. My question is about energy storage, to which he has referred a few times. Are the members of the Energy and Climate Change Committee, and indeed the Minister, thinking about energy storage and the technologies involved, including, for example, liquid air? If so, are they considering studying the effect of energy storage on investment and how the impact of energy storage might be calibrated?

Our Committee’s report urged that there should be diversity in energy supplies. Of course, the size of the role that gas can play in that regard will depend significantly on progress being made on carbon capture and storage. If that facility becomes available, there is a much bigger opportunity for gas. Therefore, we should focus our efforts on CCS as much—possibly more so now—on gas as on oil. Alongside that, however, we also need nuclear. Many of us regard it as a clean and safe technology. We have some anxieties about the progress on new nuclear power stations. EDF appears to be on the brink of making the decision in that regard, but it is not quite over the line yet. The future of the Horizon consortium is still unclear. I say to the Minister that if the only way to get nuclear power stations built in Britain soon is to accept investment from abroad, even from China, with the right safeguards, that is perfectly acceptable. The aim is to get these things under way.

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15:31 David Mowat (Warrington South) (Con)

Biofuels are rapidly becoming the biggest source of renewable energy in the UK. We have to be very careful on this with regard to security. In October, the United Nations described the increasingly prevalent practice around the world of turning corn and wheat into ethanol as a “crime against humanity”. One of the best points in the speech by the hon. Member for Brent North (Barry Gardiner) was about how the geopolitical aspects of shale gas are affecting US foreign policy. That is absolutely right. There are geopolitical issues in continuing to put corn and wheat into cars and power stations, as though we are pursuing some great environmental truth when we are not, and that is difficult.

Finally, what is causing so much error in policy is the conflict between the Climate Change Act 2008, which I support, and the need to reduce emissions and the EU 20-20-20 directive, which states that not only do we need to reduce emissions, which I support, but that that must be done with renewables. That has caused a huge amount of misallocation of capital resource and expertise. Germany is often used as a great example of a country that has hit the renewable button hard and has done it well. It is true that Germany has four times as many renewables as the UK. It also has 30% more carbon per head than the UK, because it burns more coal. We have to focus on what matters, and the directive is deeply flawed and has caused a misallocation of capital and the resources that go with that. The Minister may wish to consider that in the months and years ahead.

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15:38 Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)

It is a pleasure to serve under your chairmanship, Mr Amess. This is a welcome and timely debate. Debates on Energy and Climate Change Committee reports are, by their nature, wide-ranging and touch on a number of issues. As the hon. Member for Warrington South (David Mowat) said, the report is relatively short, but issues of energy security and energy independence touch on a wide range of Government policies, not all of which are the responsibility of the Minister. I commend the speeches by the Chair, the hon. Member for South Suffolk (Mr Yeo), and other members of the Select Committee for touching on some of those issues. Given the time available, I do not intend to repeat points that have already been made, but I will perhaps come on to some other recommendations in the report.

The Committee said, in its recent report on climate change, that only 60,000 of the 330,000 solid wall insulations, which the Government indicated were necessary, had been installed. That is an important indication of how serious the situation is.

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15:49 John Hayes (Conservative)

Thirdly, the Climate Change Act 2008 committed the UK to reducing our greenhouse gas emissions by at least 80% by 2050. European legislation commits the UK to producing 20% of its energy from renewables. Those are most ambitious goals, which brings me to the fourth challenge: the tough market conditions for energy investors and developers. With typical courtesy and acumen, the hon. Member for Brent North (Barry Gardiner) made a salient point about the need to ensure the circumstances in which investment is possible. As the shadow Minister said, we must ensure a degree of certainty and predictability in an extremely volatile set of world circumstances if we are to get the necessary investment. Investment requires such a spirit of certainty, and the Government must help to deliver that, irrespective of world conditions which are, to put it politely, challenging.

On reliability, it is vital that we have the right electricity grid to connect generation to demand if we are to ensure energy security, to meet our climate change targets and to deliver affordable electricity. The “connect and manage” grid connection regime is enabling the faster connection of new generation projects, and significant transmission investment has been approved in principle by Ofgem to extend and reinforce the onshore transmission network. As has been said, gas plays a vital role in our electricity supply. My hon. Friend the Member for Warrington South talked about a dash for gas. I would not put it in those terms, but he is right that gas will continue to play a significant role, and it is vital that we have a considered strategic view of what that means.

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