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Security of Supply

We need an open market with similar storage regimes at both ends of the interconnector so that forward supply and planning can be built into the risks and the models for trading on that market. That will not work if there are two different markets. The market is further distorted by the fact that the quality of gas in mainland Europe is different from that of UK gas. It would be interesting to hear from the Minister how his Department intends to take account of gas quality standards, and how we will adapt our trading arrangements to deal with gas of a different quality that flows from the European market. Norwegian supplies will improve the situation in the next two years. Alarm bells have been set off by what happened in Ukraine. The upside of that was that the Russians saw that if they want to reach their markets, they need to continue to make supplies. No matter how rogue the nation, the nation at the other end of the pipeline will not get the money unless it provides the goods. Sellers need money as much as consumers need supplies. I welcome the legal changes that are coming to encourage more storage. That will greatly improve the situation on this side of the market. The North sea must be recognised for its major contribution to the UK economy, in capital investment, jobs, tax and supply of fuel. The Department of Trade and Industry has done much to encourage the maximisation of its continuing potential. The North sea still has much to offer. The fallow fields initiative and the access to infrastructure have been extremely welcome, but as has already been remarked in the debate, it seems perverse for the Chancellor to increase the tax regime during his pre-Budget report at such a crucial time when we are trying to encourage more investment in gas and more supply, exploration and production. What is even more perverse about the way the Chancellor has treated the industry this time round with his tax shock is the fact that he introduced it two thirds of the way through the financial year, making the planning environment even more unstable for investors. Also, as I said in my intervention, he will not reduce the tax if oil prices fall. The tax is clearly not designed to send signals to investors that he is interested in encouraging their investment. On top of the previous tax shock, it has sent disturbing signals to the market about investment. The Chancellor should consider abating petroleum tax on older fields, because they are the hubs that allow us to explore the smaller fields around them. He should also consider how the tax impacts on tariffs, because the Department of Trade and Industry is trying to encourage the maximum use of pipelines and infrastructure, so it is perverse for the Chancellor to increase the cost of using the pipelines through extra tax. A lot of gas remains to be extracted, so it is important that we get the matter right. The North sea has an important role to play in carbon capture and storage to reduce the environmental impact of carbon fuels. The Miller project off Peterhead is a good example of the North sea’s potential as a place to dispose of carbon rather than putting it out into the atmosphere, which causes environmental disruption. Preserving activity in the North sea while we develop the technology is vital, and if we get ahead in that technology there are markets in China and India, which must produce carbon in meeting their energy needs. We must therefore find a solution on carbon capture, which, as we heard in yesterday’s Westminster Hall debate, also offers a potential future for coal. Our nuclear industry has left us with a massive clean-up bill for historic waste of £56 billion and rising. Nuclear energy was originally described as too cheap to meter, but it is leaving us a major legacy. It makes sense to use the existing plant for its maximum life, because the cost has already been incurred, but we need a permanent solution on waste. The incentives to build new capacity for nuclear power would be better directed towards dealing with the problem, which the hon. Member for Rutland and Melton (Mr. Duncan) mentioned earlier, of the signals to the different renewables sectors, in which we need to encourage diversification.