Energy: Gas Prices

My Lords, I am glad to follow my noble friend Lord Jenkin of Roding, who knows more about this subject—and has probably forgotten more about this subject—than I shall ever know. I greatly enjoyed his speech and I join him in thanking our noble friend for introducing this important debate. With due respect, it is unfortunate that there are no Back-Bench speakers from either the Liberal Party or the Labour Party. I was pleased to be present in the Chamber to hear the magisterial survey of the noble Lord, Lord Owen, speaking from the Cross Benches. I intend to speak a little less on the technicalities of gas and a bit more to the second part of my noble friend’s Motion on the implications of our present risks regarding energy policy generally. I hope that when the energy review finally lands on the Prime Minister’s desk he will consider machinery of government issues, because we urgently need a department of energy in this country. I have argued for that previously—we need a proper Secretary of State sitting at the Cabinet table, as we used to have, to discuss energy policy. That is the sole exception to my general view that machinery of government changes do not solve political problems. Political problems are solved by willpower, vision, determination and managerial grip—not machinery of government changes. That truth is starkly illustrated by the present apparent collapse of the Home Office, that once great department of state. By comparison, the Department of Trade and Industry, whose dismemberment and abolition would automatically flow from the setting up of a proper department of energy, is a comparatively innocent department, but is ineffective—as the National Audit Office’s savaging of the Small Business Service two days ago has demonstrated. The DTI still needs six Ministers—a matter of continuous amazement to noble Lords on this side of the Chamber. If the department was no longer there, trade and industry functions could look after themselves, with a little help from the Foreign and Commonwealth Office and the Treasury. However, I do not believe that energy policy can look after itself. That area of policy has broadly been becalmed since 1997, with the DTI either refusing or not being allowed to square up to the serious risks that face our country, which have been outlined by my noble friend Lord Jenkin of Roding and by the noble Lord, Lord Owen, from the Cross Benches. Certainly, the department has not been allowed to square up to those serious risks until the Prime Minister, endlessly seeking legacy issues, sought to wind up the nuclear issue in pursuit of tomorrow’s headlines, a point to which the noble Lord, Lord Owen, clearly referred. I do not use the overworked word, ““crisis””, but I do think that the risk to our energy supplies is at the highest possible security level, in terms of both the overall economic risks and terrorist risks. We have only to look at the European-wide spot electricity prices, which have risen by more than a half since 1 January this year. This looming problem has been glaringly obvious since the beginning of the decade. Some noble Lords may know that, with due modesty, there can be no greater satisfaction than reading one’s words from a few years ago which then turn out to be true. With, I hope, properly restrained pleasure, I shall repeat my words in the debate on the gracious Speech on 27 November 2003. I said:"““The risk is that there will be serious pressure on gas supplies in particular between 2005 and 2008. Our use of gas is growing at 4 per cent a year yet our UK production will begin to decline from 2005. There is a yawning gap afterwards. Unfortunately, it will not be before 2007 or 2008 that we shall have new, liquified natural gas terminals””.—[Official Report, 27/11/03; col. 62.]" I only wish that all of my predictions about the future had been so accurate. We now have further predictions, which the noble Lord, Lord Owen, has drawn to our attention, that we will face a vacuum in supply in the years 2012, 2013 and 2014. The noble Baroness, Lady O’Cathain, spoke with great authority on the gas issue. I shall not play any more little Lord Echo to her words. It is vital that an energy review comes out with a balanced energy policy, destroying that ““either/or”” approach, which makes gas, coal, nuclear or, indeed, alternative energy very fashionable. I speak with some past declared interest on renewables as a director of a pioneering renewable energy company between 1996 and 2004. It was called Energy Power Resources Ltd and was much derided, as many alternative energy companies were in the early days, but now much desired by larger players in the world. It was sold on to Macquarie Bank a year or so ago, showing how desirable such companies are. That company was involved with everything renewable, from wind to biomass and back again, which has given me a lot of technical background with which I shall not trouble your Lordships, save to say that I believe that renewables have an important and continuing role to play in energy policy in this country. However, having some technical knowledge allows one to spot a government cop-out or obfuscation. Let me cite one. The Government boast of their success in promoting co-firing—the burning of coal with biomass in our power stations to produce power and electricity, using coal and biomass materials such as straw or Miscanthus, or elephant grass as it is known colloquially. That is said by the Government to add to the diversity of supply. I say hear, hear, as it certainly does that. It is also said to add a great deal to the Government’s green credentials towards meeting their stated objectives for 2010 and 2020 in their targets for renewables. It certainly does not do that. The noble Lord, Lord Sainsbury, revealed all in a Parliamentary Answer to me on the 11 May, which demonstrated that some two-thirds of the biomass utilised in co-firing in UK power stations is actually imported biomass. That does nothing for the Government’s green credentials at all because a great deal of energy has been used in transporting that biomass material from different parts of the globe, and of course there is the risk that in the race to produce biomass in third countries, valuable agricultural land is used. That is much worse as logging and deforestation take place so that Miscanthus grass and so on can be produced and exported to this country. It is not a great help to the Government’s green credentials to boast about the amount of biomass used in co-firing. I greatly prefer the approach to clean coal outlined by my noble friend Lord Jenkin of Roding. That is a little obfuscation but there is a much greater obfuscation which I hope the noble Lord, Lord Sainsbury, will deal with and give a direct answer to what I hope is a straightforward question. The Government have publicised much-vaunted figures for the use of renewables to be reached by 2010 and 2020. I simply cannot get a clear answer to this question. Are these figures, to be achieved by 2010 and 2020, targets—which if passed means success or if they are not met means failure—or are they aspirations? We need clarity of language and a straightforward answer to that question. At the other end of the spectrum from renewables, co-firing, biomass and Miscanthus grass is nuclear—the ““N”” word, to which my noble friend Lady O’Cathain referred earlier, and which is beginning to creep into this debate. I do not think that we can delay on this issue. I do not think that nuclear is some ideal form of power generation. All forms of power generation have their problems. They have their costs, inefficiencies and environmental impacts. But everything from biomass to nuclear and back again has its place in an integrated and balanced generation policy. Without the contribution of renewables and nuclear in the face of our dependence on politically volatile imported gas supplies from central Asia, north Africa or from the Middle East—I do no more than pause yet again on the terrorist threat at this stage—we shall be in deep trouble. I hope that my party—the Conservative Party—will, if necessary, help out the Government on this nuclear power issue. We helped them out last night on their Education and Inspections Bill, which walked up the Corridor for its First Reading here today. We have saved their bacon once; we may have to save their bacon for a second time on the nuclear issue. Just as on education, we may have to be Mr Blair’s very best friend in this context. The new policies to be introduced by the Conservative Party under the feisty and forward-looking leadership of my honourable friend Mr Alan Duncan in another place will give us a great new approach to energy issues. I congratulate my noble friend once again on introducing the debate.