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Security of Supply

The Chancellor pointed out in his pre-Budget report the corresponding taxes on exploration in the United States and other parts of the world, and his proposals are consistent with those. However, we shall return to that issue at the time of the Budget. The first of the challenges and problems that we face relates to renewables, and the second is the fact that our energy reserves are in decline, as I mentioned earlier. The third is that prices have been rising. We all have to face the fact that the days of cheap energy have gone, probably for ever. World prices for fossil fuels have increased by a half over the past three years, and oil prices have reached record highs. This in turn has had a direct impact on gas prices. Those global effects have been compounded by the decline in North sea production and market nervousness about a tight gas supply situation in a winter predicted to be colder than usual. Fourthly, our nuclear reactors, which currently supply a fifth of our energy, will all be decommissioned by 2035, and most of them will be out of service by 2025. Decisions need to be taken on whether we need a new generation of nuclear power stations, or whether we are content to see nuclear disappear from our energy mix.