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Energy Security

I am sure that my hon. Friend forms a formidable duo with the hon. Member for Lancaster and Wyre (Mr. Wallace). She makes an important point. One thing that I find curious about the Opposition's proposals on planning is that they say that the Government should set the planning statement and that the Secretary of State should continue to exercise judgment about specific applications. I think it would be better for my hon. Friend's and the hon. Gentleman's constituents if those decisions were taken independently, so that the people who put forward the overall plans on gas storage were not also making the individual judgments. I maintain that the planning reforms that I have talked about are important. Let me say one more thing about gas. I think that the hon. Member for Tunbridge Wells has found that there are no easy answers to this issue. The difficulty is finding a balance between the role of the market and role of the state in ensuring security of supply. After last year's winter, we considered, along with Ofgem and the National Grid, whether the balance was right and whether more needed to be done on how the market worked. That led to two changes, the first of which was in the information that is available to the market to ensure that suppliers understand the short-term supply-and-demand situation and the availability of gas from storage. The second change was an increase in the effective penalties on shippers who fail to deliver gas that they are contracted to provide. We continue to consider whether more needs to be done on the operation of the market, and it is right that we do that. The hon. Member for Tunbridge Wells did not necessarily refer to this point, but it was probably implicit in his speech, and it is even more important given that two thirds of the world's gas suppliers are in Russia and the middle east. It is important to note that that is not the case for our gas suppliers; that is why our diversity is so important. It was because of our interest in these issues that we asked my right hon. Friend the Member for Croydon, North (Malcolm Wicks) to produce his important report on international energy security, to which we will respond before the general election. I think that the most important conclusion from that report was about the strength that we get from the diversity of our energy sources. That is a strategy that he pursued very successfully as Minister for Energy. It has borne fruit and we continue to pursue it. As part of the road map to 2050 that we are preparing, we are considering whether more needs to be done. His report emphasised the importance of long-term contracts, which are more common on the continent, as well as a variety of other issues. It is also worth citing what my right hon. Friend said in his report about the notion of strategic storage, which some people have put forward, effectively suggesting that the Government should build their own storage:""Any decision to proceed with strategic storage would risk displacing investment in commercial storage, as commercial players would see the existence of strategic storage, which they would suspect might be accessed simply in response to high prices…as undermining their investment case."" What is good about my right hon. Friend's report is that it shows that there are no easy answers in this area, while charting a way forward for the Government. We will respond to his report, and over the coming months to Ofgem's project discovery work, including any recommendations, alongside the 2050 road map in the spring. Let me deal with electricity, which the hon. Member for Tunbridge Wells (Greg Clark) mentioned in his speech. Diversity is very important here. About 18 GW of power supplies will go out of commission towards the end of this decade, while 20 GW are under construction or have planning permission. It is interesting to note that when E.ON made its decision to delay the Kingsnorth coal-fired power station, it cited the fact that there was not the expected demand in the system. Because the hon. Member for Tunbridge Wells has tried to make a cottage industry out of the issue of energy unserved, let me explain why I believe he is engaging in the alarmism that he said he was going to try to avoid and putting a wrong spin on the matter. The Redpoint analysis, published at the time of the national policy statements, updated the figures from the low-carbon transition plan. I will send the hon. Gentleman a copy if he does not have one. It says that energy unserved, which the hon. Gentleman made such an issue of, will be zero in 2017; it says that the capacity margin will be 15 per cent. in 2017 and will stay above 10 per cent. for the rest of the decade. What that illustrates is why the hon. Gentleman's interpretation of the original graph is so alarmist. Demand and supply projections for seven or more years out are always going to be subject to significant change. They are not really a forecast of our security of supply position, but information for the market to respond to, which it does. That is what we have found in the past. When I came into this job, people were saying that 2015 would be a big problem; the hon. Gentleman is now saying that the problem will come in 2017, but I have given him updated projections today. I urge him to engage seriously in the debate.