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Energy Security

Understandably, the context for much of this debate has been the appalling conditions facing our country this winter, and we should remember the elderly at risk from the cold. We often talk about global warming, but many of our elderly would say that the chance of warmth would be a fine thing in their living rooms and bedrooms this winter. That is an urgent social issue. However, I want to begin my remarks by talking about energy security in the longer term and by dealing with the matter in a global context. When the world comes out of economic recession, the global demand for energy will resume its previous trajectory and, depending on our success in respect of climate change, the International Energy Agency estimates that global energy demand could increase between 20 and 40 per cent. by 2030. History is playing a trick on the British isles. At this time of globally increased demand for energy from the great emerging nations of India, China and the rest, we are moving to a position of much greater import dependency. For our country that represents not just a challenge in relation to energy supply, but a challenge that has implications for our foreign policy. When we talk about energy security, what do we mean? We should mean not just the important issue of where we get the stuff from. We should talk about our need for energy security with imports, which does not jeopardise our capacity to have an independent foreign policy that takes account of human rights and democracy, including in the countries that will be supplying much of our energy. When Tony Blair as Prime Minister said that energy policy and energy security in the 21st century could become as important to a nation's defence and security as conventional armed forces, he was at least raising an important hypothesis for us to discuss. During the debate we have considered some of the trends affecting our country. Yes, there is a great deal of resource still in the North sea—much to be explored in the future west of Shetland, and so on. Nevertheless, our gas and oil from the North sea are in decline by some 6 or 8 per cent. a year. That is a fact of life, although we must do our best to push the line in the right direction. Meanwhile, our nuclear energy capacity has declined from 30 per cent. at its peak to about 15 per cent. today. We know the story of coal and the missed opportunity there in an earlier generation. Our renewables are contributing more and more each year but still a very small percentage. We must be as smart as we can in our foreign policy on energy so that we are in the game of diversity, as the Secretary of State says. We must not be over-dependent on any one fuel. We must avoid the dangers of a new dash for gas, which seriously concerns me. We should not source too much of our energy from any one company, region or country. We should build up our links with countries that are important to us, such as Qatar and in particular Norway. With the right approach, we could secure more gas from Norway. We need diversity, and we need to ensure that in future, despite the trend towards import dependency, we secure as much of our energy indigenously, from within the British isles and our seas, as possible. That is a recipe for the Secretary of State's policy on renewables. The development towards 15 per cent. of our energy coming from renewables by 2020 is as much about energy security as it is about climate change. The two go together. There is a role for coal. To ignore coal would be a national security disaster—hence colleagues talk perfectly properly about the importance of carbon capture and storage. Nuclear must play a key role. It is important for climate change and for the nation's security. In my report to the Prime Minister, to which the Secretary of State kindly referred, I go as far as to say that if by 2030 some 35 to 40 per cent. of our electricity was coming from nuclear, that would be sensible for the nation's security as well as for global warming. There is far more that we can do to reduce energy demand, not just in housing but across the industrial process and in transport. In the final few minutes available to me, I shall turn from that macro perspective to a much more specific perspective on gas. As I said, I fear that there could be a new dash for gas, partly because gas power stations are far easier to build than nuclear and some other kinds of power stations. That needs to be avoided. Gas is an important part of the mix, but it should not be over-dominant. There are issues about gas supply in the UK that I set out in my report to the Secretary of State and the Prime Minister, which I know the Government are taking seriously and to which they will respond in due course. I do not expect a response today. One such issue is that, compared with many of our continental partners, we have a relative lack of long-term contracts for gas. Companies tend to buy short-term, or sometimes "spot". Is that a problem? When we say that companies have a supply obligation, what does that really mean? In the course of the inquiry for my report, I found that the supply obligation is a bit like jelly—difficult to get to grips with. My understanding, and that of those who advised me, is that in our present system there is no way for National Grid or the regulator to establish whether, in aggregate, there is likely to be sufficient availability of gas during any one year or any one winter. That does not mean that the gas will not be there, because companies might buy "spot" or short-term, but it is not a very secure position. Having been Minister for Energy and having had to take my share of responsibility for these things, I found myself rather less confident about some of this than the Liberal Democrat spokesman—that is a bit strange, is it not? When I did my report, that raised in my mind some serious issues about what we mean by the supply obligation. The regulator is looking into that, as is the Secretary of State, but we need to consider it carefully. My final point is about gas storage, which is a more complex issue than those on the Opposition Front Bench—perhaps both Front Benches—fully understand. The Secretary of State said that there are arguments against strategic storage, and I understand that; but there are arguments for it, as well. It is a question of balance. If we simply go in for commercial storage, we must recognise that much of it is owned by German companies and in certain winters some of it, from places such as Rough, flows towards the continent. How do we secure in extremis—in emergency conditions—the stored gas that can be used first and foremost for British business and British homes?