14:30 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

I am grateful to you, Miss Begg, for calling me to open this important debate on a subject fundamental to our country’s future. Energy security is a high priority on the Government’s political and economic agenda. Our view is that energy security and climate change go hand in hand and must be addressed together. At the moment, we need particularly to secure new investment in the United Kingdom’s energy generating capacity in order to compensate for facilities that will soon be decommissioned.

In addition to that challenge, we face climate change. We must build a different kind of economy that cuts our carbon emissions in order to tackle climate change, and that makes our energy secure in a way that can endure volatility.

The Minister said that the Government have made the green economy and energy security priorities, which I welcome. I suspect, though, that they tend to focus more on climate change and the green economy than on energy security. May I press him on the remarks made in the coalition programme about energy security, particularly the three bullet points?

We also announced today that we are setting up a carbon capture and storage development forum to focus specifically on removing the obstacles to investment in CCS. It will consider the nuts and bolts, just as the nuclear development forum does. We will also make headway on a road map so that people can hold us to account on our ambition. Ambition is important, but without a road map, targets have little benefit or meaning.

Clearly, the Deepwater Horizon tragedy in the United States has been in our minds, and we must consider the implications for the UK as we continue to develop in the North sea, particularly in the deeper waters west of Shetland. We must continue to increase our vigilance. We have the most robust regime in the world for environmental protection and safety protection for the rigs involved in drilling operations in the North sea. All installations must have an approved plan to deal with any spills and we have doubled the number of inspections carried out by the Department and increased by half the number of inspectors. We believe that we have responded effectively to the challenges. Unlike the United States, we have always had a clear division between the licensing operations, which are carried out by the Department of Energy and Climate Change, and the health and safety regime, which is the responsibility of the Health and Safety Executive. That separation of responsibilities has been important in securing the safety and environmental standards that operate in the North sea.

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14:58 Emily Thornberry (Labour)

As the Minister said, it is of course not just a matter of what we will do in the short term; we also need a long-term policy. In those circumstances, therefore, the importance of renewables cannot be overstated. We have a very challenging target for the amount of energy demand that we want to fulfil through renewables, and Labour made a good start. Renewable energy has doubled in the past five years and, as the Minister has been kind enough to point out, we introduced the renewables obligation in 2002, which has enabled a huge expansion of onshore wind and made us one of the biggest producers of offshore wind in the world. I welcome the Secretary of State’s decision to confirm the £5 million grant offered by the previous Government to Siemens Wind Power. However, without a robust planning system we will not get enough wind turbines here:

Before the Conservatives made their deal with the Lib Dems, they were highly exercised by the gap between the end of the life of the current fleet of nuclear power stations and the earliest date by which we might get some new nuclear power stations. Why are the Conservatives now so relaxed about that? There seems to have been a change. The Government should be taking up the long-term challenge of decarbonising the economy and the job market, rather than just embracing short-termism, but some of the decisions that have been made are simply short-termist.

The Government share our view that the nuclear industry should not receive a direct subsidy from the public purse, but the industry needs clarity and reassurances, not obstacles. In the words of Richard Nourse, managing partner of renewable energy fund novusmodus,

The Labour Government made a huge commitment to investment in carbon capture and storage technology for four coal-fired power stations. Through that technology, we intended drastically to decarbonise our energy supply. Can the Minister perhaps give us a little more detail on whether he intends to go ahead with the four coal demonstration projects? Can he give me some information on the Government’s thinking about the locations of those projects and the bidders? Will he confirm that the coalition plan is that CCS will be deployed more widely in 2020, and that any new coal plant constructed after that will be fully fitted with CCS? One hears rumours that the Government are thinking again about whether there will be four coal-fired CCS plants or whether one will be gas. Is there any truth in those rumours? Before the election, the Minister was much exercised by emissions performance standards for CCS. Will he tell us when or whether he is introducing proposals for such standards?

There is great concern about that, and it does not come just from the Opposition and the British Chambers of Commerce. Concern is also voiced on page 53 of the second progress report to Parliament from the Committee on Climate Change, which says that key actions for the future include

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15:17 Dr Alan Whitehead (Southampton, Test) (Lab)

As far as energy security is concerned, we live in a very uncertain world. We have challenging and serious commitments to meet to ensure our energy security in the context of the rapid decarbonisation of our economy. We need to make sure that our supplies and our energy production are secure in the context of moving from a high-carbon to a low-carbon economy in a short time. In talking about the path from here to 2050, we should reflect that in the past 40 to 50 years we have in any event rapidly changed the mix of our energy economy. We have moved from dependence of about 90% on coal for energy to a figure of about 12% to 15% in 40 years or so. I anticipate that there will be similar rapid change in the next 40 years. The question is whether that change can be accomplished in accordance with the energy security considerations that I have set out.

In the context of climate change and our ambition to reach the targets we have set, it is absolutely right that energy efficiency will play a substantial role. Indeed, if EU energy efficiency targets of even 20% are met by 2020, that will result in something like a 13% reduction in electricity use in the EU. That underlines the key role of energy efficiency. I am completely with the Minister as to the key role it must have in our energy security—another example of protection of the home front in energy matters. However, the changes in our energy economy that will result from a far lower dependence on oil in the long term will almost certainly mean a much higher dependence on electricity for, among other things, transport, particularly with the rise of electric vehicles. At least part of the energy efficiency gain will be offset by increased demand for electricity as electric transport becomes increasingly the norm.

I might add that gas is not a particularly benign fuel for the environment. It is not as intense, in relation to CO 2 emissions, as coal, but it is very intense nevertheless, and was the subject of a recent letter from the Committee on Climate Change recommending that future gas-fired power stations, as well as existing and future coal-fired plants, should be CCS-adapted. We should not for a moment believe that gas is the alternative or the answer to the end of the oil economy or the diminution of the coal economy. Nevertheless, shale gas in the US and elsewhere has transformed the picture in recent years of likely gas reserves. Indeed, the liquid gas receipt terminals in the United States built for the same reason as those that were built in the UK are, in effect, standing idle because of the change in the gas economy that has resulted from the emergence of shale gas.

Indeed, given our concerns about our carbon dioxide emissions and footprint, new supplies of uranium would need to be found. Otherwise, existing supplies would be depleted, and the richness of uranium per tonne of rock mined would be so low that the carbon footprint would eventually equate to that of a gas-fired power station. That would not follow the low-carbon footprint route for our energy supplies in the long term. The figures relate to Australian and, to some extent, Canadian supplies of uranium. There are richer supplies in places such as Kyrgyzstan, but they raise the same questions for energy security in an uncertain world set against supplies of oil and gas.

The things that I have just mentioned are just part of the answer to the question, “Can we be self-sufficient in our energy supplies over the next 40 years?” The facile answer to that question, which we occasionally hear, is, “Why, oh why, can’t we be self-sufficient in our energy supplies, because we are the windiest country in Europe, with the biggest tidal range and the biggest effective waves in Europe? We must be able to be energy self-sufficient, mustn’t we?” It is true that we have the biggest wind supply and the greatest tidal range of any country in Europe and we have the largest range of facility of any country in Europe, but that in itself does not answer our question. The analysis in a recent report by the offshore valuation group entitled, “The Offshore Valuation: A valuation of the UK’s offshore renewable energy resource”, is increasingly providing an answer.

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15:48 Mr Iain Wright (Hartlepool) (Lab)

May I say that it is a pleasure to serve under your chairmanship, Miss Begg, especially given the lead that you have provided on energy policy and the fantastic work that you have done in your role as a first-class constituency Member of Parliament? May I also say that it is a huge surprise to catch your eye? I had not intended to speak at length—I wanted to make a couple of interventions—but I am pleased to participate in an increasingly vital part of public policy, which we will need to consider in the 20 to 30-year period as we move towards a decarbonised economy.

I mentioned my final point in another debate in this Chamber on nuclear power, and I give notice to the Minister that I will keep banging on and on about the role of the north-east in energy production and supply. We have all the ingredients in place for my region to be the great powerhouse, not only for this country, but for Europe and, arguably, the world in ensuring that we have a diverse source of energy production and supply. What can the Minister do to ensure that potential? Narec in Blyth is a centre of excellence for renewable energy. Given where we are in terms of marine technology and our proximity to the North sea, all the different sources of energy—oil, gas, renewables and nuclear in my constituency—can provide the 21st century, modern economy that the north-east demands.

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15:58 Charles Hendry

The hon. Member for Islington South and Finsbury spoke about how the last Government had doubled the amount of renewable energy. She managed to get the UK to No. 26 in the European Union, which was undoubtedly an enormous triumph. I think that we are just ahead of Malta, but have slipped behind Luxembourg, which is obviously a desperate blow. Frankly, it is not a good place to be and we need a sevenfold increase over the next decade to get us where we need to be. That is a massive challenge and more must be done across the spectrum.

There is an issue about winning public support. We believe that renewable energy should not be imposed on communities, but should have popular support within communities. The previous Secretary of State, the right hon. Member for Doncaster North (Edward Miliband)—now shadow Energy Minister before he moves on to his new job—has spoken of different techniques. First, he said that people should have wind farms because it would be good for everybody. That did not really win people’s hearts and minds. He then said that people should have a wind farm because it would be bad if they did not—a bit like somebody who drives across a zebra crossing without stopping—but that did not win hearts and minds.

I agree with some of the comments from the hon. Member for Southampton, Test. Because of the inherent flexibilities in the system, one has to consider how one manages that. One has to have back-up systems or use what I hope will become a particularly exciting area of policy—storage technologies. Those can involve compressed air, pumped storage, hydrogen and batteries. The pace at which global technologies are moving forward in that area is very exciting. It offers us eventually the great prize of renewable energy from wind being available when people want it, rather than simply when the wind provides it. I think that that will be an important part of policy.

The hon. Member for Islington South and Finsbury spoke about carbon capture and storage. I shall answer directly some of her questions. She asked whether every new plant built after 2020 would be required to have full CCS. The position is as it was under the Labour Government, which is that they will be required to have CCS or that it should be retrofitted in due course. An important aspect of the levy is that it can be used for retrofitting in plants used in the pilot projects.

The hon. Lady asked whether the four plants would all be coal or whether one would be gas. We are considering the recommendations of the Committee on Climate Change, which said that we should be doing a pilot project on gas. We need to consider the balance, deciding whether one of the four should be gas or whether the first four should be coal. There is no doubt in our minds that coal is the imperative. Coal is the greater polluter; it is where the technology is closer to the market. The focus is very much on coal, but we were pleased that the levy was changed under the Energy Act 2010 to allow it to be used also for developing gas and biomass technologies. The hon. Lady also asked about the emissions performance standard. We are indeed committed to putting in place an emissions performance standard, and in the near future we will be setting out our thinking and how we intend taking it forward.

The hon. Member for Southampton, Test always brings a huge amount of wisdom and experience to such debates, for which I am grateful. He spoke about the oil sector. I agree with him on the subject of peak oil. Realistically, we will not know when peak oil has happened until some time afterwards. However, Nobuo Tanaka of the International Energy Agency spoke earlier this week about the need to bring down demand ahead of the peak in supply. If we can get the peak in demand to come earlier, consumers will benefit because the price of oil will drop dramatically. If the peak in demand happens after the peak in supply, the oil companies will benefit because they will be able to ramp up their prices. For me, that shows the imperative to decarbonise society and to move ahead more quickly.

We have talked of energy efficiency today; that will clearly be part of the solution. We shall need to decarbonise ground transportation, but we also need more low-carbon methods of electricity generation. In looking at the way forward, we need long-term vision. We must decide what steps should be taken now in order to pre-empt the inevitable; the situation will become more challenging over time, and we must try to ensure that society and the nation decarbonise.

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