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Security of Supply

The debate supplements the first report to Parliament on United Kingdom security of gas and electricity supplies that was laid in July 2005. In the 2003 Energy White Paper, we set the objectives of secure, sustainable, affordable energy for all in a competitive, transparent energy market. Overall, Britain is in a strong position. We have a broad range of energy supply and a balanced mix of electricity generation. Around 19 per cent. of our electricity comes from nuclear, 33 per cent. from coal, 40 per cent. from gas and 4 per cent. from renewables. Although the proportion from renewables is small, it has almost doubled in the past four years, and is today sufficient to supply more than 2 million households. On gas infrastructure, the market is planning to deliver some £10 billion of investment in gas import and storage projects between 2005 and 2010. The UK has enjoyed some of the lowest energy prices in Europe for more than a decade. Even after the recent price increases, our domestic gas remains the cheapest in Europe. According to Ofgem, domestic energy bills are £140 less than they were in 1990. Our liberalised markets mean that the cost of industrial gas is also competitive. In the past 14 years, the cost of energy to British industry has been around £8 billion less than the cost to German industry. However, there are problems and challenges ahead that we have to acknowledge and resolve. First, we need to reduce greenhouse gas emissions. Despite recent increases, we are still on track to achieving our target under the Kyoto protocol. However, there is much more to do if we are to meet our aim of a 60 per cent. reduction by 2050. Secondly, our energy reserves are in decline. North sea production has declined more quickly than predicted. Britain has already moved from being a net exporter to a net importer of gas, and soon we will become a net importer of energy overall, in common with most other developed nations.