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Energy Security

I knew that my instincts were right: I should not have given way to the hon. Gentleman. In the 1980s, we set the market framework that delivered the cheapest energy prices in Europe for the next 20 years. The model has worked, and it has been pretty robust up to now. We heard from the hon. Member for Nottingham, South (Alan Simpson), who will be a great loss to this Chamber when he steps down as a Member. He made a very thoughtful and visionary speech on themes that he has made his own during his time in the House, and he described his concern to ensure that feed-in tariffs are set at the right level. We share his concern, because we had to work very hard to put those tariffs on to the statute book, and it would be a tragedy if they were set at a level that did not deliver the benefits that we hoped for. My hon. Friend the Member for Croydon, South (Richard Ottaway) rightly focused on the investment that has been made and the vital contribution that liquefied natural gas terminals have made to our energy security. We heard a very thoughtful speech from the hon. Member for Preston (Mr. Hendrick), and the hon. Member for Angus (Mr. Weir) brought us back to gas when he talked about carbon capture and storage. We supported him in a Division on the issue in the Energy Bill Committee yesterday, and I am sorry that we could not persuade the Government to take a broader view on CCS and help Britain take a big step forward in that area. Much of this debate has, understandably, focused on gas storage. The Secretary of State talked about the issue, saying that we have the lowest prices in Europe, but if there were more gas storage, there would be greater price benefits to our consumers. Gas could be bought in the summer, when it is cheaper, and sold without big price spikes in the winter. There is a link between storage and pricing. The Secretary of State also referred to the recently published national policy statement, as if that will put right gas storage. We have done a quick check, and of the 675 pages of policy statement that the Energy and Climate Change Committee is going through, seven—1 per cent. of them—relate to gas storage. That is not quite the commitment that we are looking for. We have to recognise that all is not well. At the maximum level of gas storage in this country, we had 16 days. Last week, my hon. Friend the Member for Tunbridge Wells pointed out that we had eight days maximum storage left, and today it is down to six. Part of the problem has arisen because the Langeled pipeline has not been working at capacity, just as part of the problem four years ago was the fire at the Rough storage facility. There are no grounds for complacency because of the external pressures that are creating a real problem of demand. This is the third time in four years that we have been down to a few days of gas storage. Indeed, if it had not been for the recession—with demand overall down by 5 per cent. and industrial demand down by 15 per cent.—there is no doubt that we would be in very difficult circumstances now, and possibly having outages. We are in the strange position that the electricity interconnector with France is still exporting 2 GW of power at a time when our own industrial users are being asked to switch off their gas. That is something that the market decides that it wants to do, but we would be much more comfortable about that if we had more gas storage and knew that our industrial users would be able to work when they wanted to do so. Much of the rest of the debate dealt with the issues of electricity generation. In the Secretary of State's opening remarks—I am sorry that he is not in his place—he talked about the need to focus on the facts. He talked about wind, but he did not mention the need for massive back-up to make wind power reliable. In this cold spell, one fifth of 1 per cent. of our electricity has come from wind, which shows the extent to which back-up is necessary. He spoke about offshore wind, but he did not mention the fact that we are potentially losing some of the best companies in the country, such as Aquamarine and Pelamus, which are now looking to invest in the US and Portugal, because greater support is coming from their Governments. Nor did he mention the problems with the supply of ships, cranes, skills and funding—and apart from those problems, everything is going really well! The Secretary of State talks about the positive aspects, but he does not mention the challenges. The Secretary of State talked about nuclear, but he did not really comment on the fact that Vincent de Rivaz, the chief executive of EDF, said this week that the key driver of investment will be a floor price in carbon. What is the Secretary of State's position on that? On carbon capture and storage, he did not talk about the need for a real Government vision on the investment in pipeline infrastructure and a body to ensure that we co-ordinate the work in that area. The Government's approach has been characterised by a mass of ambitious targets that sound good, but we have no road map for getting there. There is a road map for nuclear, but on everything else nobody knows who is responsible for doing what and when in order to meet the targets. That has led to Ernst and Young saying that we need £200 billion of new investment in our energy infrastructure over the next 15 years—£50 billion in the next five years—because of the failure to secure that investment in the past. We face a real challenge and a significant wake-up call. Several things have happened today that reinforce that point. Alistair Buchanan, the chief executive of Ofgem, has warned that Britain's gas market faces a "cliff edge" in 2015-16 that could cause supplies to run short by the end of the decade. Some of Britain's largest businesses have written to the Financial Times to say:""The bottom line is that the UK was unable to meet the needs of all consumers…As a nation, we need to take security of our energy supply more seriously."" It has also been announced that half the members of the Chemical Industries Association say that increased gas storage is essential to future investment by their companies in the UK. Reuters is even quoting an unlikely source who should know the facts, who said today:""There is clearly an urgent need for additional gas storage in the UK"." We welcome the Secretary of State to the cause. The truth is that the Labour party has always been the party of energy insecurity. In the 1980s, it opposed the building of Sizewell B. In 1997, it was elected on a commitment to move away from gas to coal just as our coal production was beginning to decline and imports were increasing. In 2003, the Government ruled out nuclear as having any role to play in future energy policy, only to reverse that decision four years later. They have known for years about the amount of our capacity that will be decommissioned, but they have failed to secure the new investment. This debate is not just about the challenges of this week, but the longer-term issues facing our nation on which the Government have been found wanting.