Greg Clark says Government complacent on gas storage

The House of Commons had Energy and Climate Change questions yesterday. Shadow Secretary of State Greg Clark was very concerned about Britain's gas reserves:

"On 20 February this year—two weeks ago—Britain hit a new low, with just four days-worth of gas in storage in the reserve. Does the Minister consider that an acceptable margin for safety?

Mr. O'Brien: It is not about how many days worth of gas there are. The amount of gas in storage at a given point cannot meaningfully be assessed in terms of days. Stored gas is not used on its own to meet UK demand in any way. The North sea gas reserves put the UK in a position unlike that of other countries. Yes, we need gas storage, and we will need to increase the amount of storage as our imports increase, but we still have a substantial amount of gas coming from the North sea. That means that we do not need quite the amount of storage capacity that other countries do, although we will need to improve gas storage capacity in future as North sea gas depletes, and imports rise.

Greg Clark: That is a remarkably complacent answer, because every country in the world is content to denote their storage in days—apart from Britain, apparently. For the second time in only four winters, we almost ran out of gas, and almost did not have sufficient gas to meet demand. According to a written answer that the Minister gave me only this morning, only the depressed state of the economy, due to the recession, saved us from running out. Even the official regulator thinks that we do not have enough storage. In the Energy and Climate Change Committee, my hon. Friend the Member for Bromsgrove (Miss Kirkbride) asked the regulator whether he thought that enough storage was being planned, and he said:

“I am not happy to talk about this...we were hoping”—

that storage would have doubled in the past five years—

“and we have barely moved.”

Given that record, do we have to hope that this Government run out of time before Britain runs out of gas?

Mr. O'Brien: That is a stunning statement the week after Centrica announced a £1.2 billion proposal to create the second-biggest gas storage facility at the old gas field in Baird in the North sea. We hope that that will come on stream from 2013. There are 17 other projects, too. That is one of the main areas for us, and the Government are setting out their priority of bringing gas storage on board. Let me be clear. The hon. Gentleman’s claims that we were suddenly about to run out of gas take no account of the fact that the Norwegian gas fields were pumping vast amounts of imports into the country. We were therefore able to manage successfully and capably the issues that arose as a result of the recent cold snap and the Russia-Ukraine dispute."

Other Conservative members asked interesting questions too.

Kettering MP Philip Hollobone wanted to know about LED lighting:

"LED lighting is super-efficient. It uses just 5 per cent. of the wattage of a conventional light bulb; it generates very little heat, which means that it reduces fire risk in applications; and it contains no mercury, which means that it is safer to dispose of. May I urge the Minister to have discussions with the Department for Environment, Food and Rural Affairs on this issue? Can she also advise the House what the low-carbon business innovation unit within her Department is doing to promote this technology?

Joan Ruddock: I thank the hon. Gentleman for his question, and I should tell him how much we agree with him on the huge potential benefits of LED lighting. That is why we have put some LED products on to our energy technology product list and why we have made those specific types of lighting available to benefit from the enhanced capital allowance scheme, which has delivered approximately £550 million in tax relief to those who have purchased products on the Carbon Trust’s energy technology list. The potential for the makers and retailers of LEDs is considerable, and I shall pursue the points that he has made. As I have indicated, I am sure that our officials will continue those important discussions."

Former Cabinet Minister Peter Lilley asked about renewable energy:

"Can the Secretary of State tell me what proportion of the cost of household and industrial electricity bills is required to meet the cost of subsidising our renewable energy commitment?

Edward Miliband: It is different for electricity and for gas, but it ranges between 2 and 14 per cent. of the total, depending on how it is calculated. I profoundly disagree with the right hon. Gentleman on this issue, because there is no low-cost, high-carbon future for this country. Demand from India and China will drive up the price of oil and gas, and we cannot assume that $40 a barrel today will be a permanent price for oil. That is why it is right to plan for and move towards a low-carbon future. The danger of the right hon. Gentleman’s approach is—as I said in reply to my hon. Friend the Member for Bolsover (Mr. Skinner)—that it is a recipe for short-termism, and we will end up in the same situation as a year ago, with high oil prices and without the indigenous sources of fuel that we need."

Shadow Minister for the Environment Greg Barker questioned the Government's commitment to renewables:

"Yesterday, the Prime Minister told the American Congress that only by tackling climate change could we create the millions of new green jobs that we needed. Yet back in the real world here not only are we flagging in our efforts to meet our 2020 renewables targets, but E.ON UK has been quoted as saying that the economics of the London Array project are on a knife edge. In addition, UBS is predicting a 20 per cent. decline in investment in new wind capacity this year, and Siemens has seen a 28 per cent. year-on-year decline in renewables orders. However, instead of seeing them drive real job-creating change now, all that we see from this exhausted Government is the same old dither and delay. So will the Secretary of State say how many new green jobs his climate change and renewables policies will create this year?

Edward Miliband: Thousands of green jobs will created. The kind of attitude displayed by the hon. Gentleman, who knows that Conservative councils throughout the country oppose renewable energy and wind turbines, does not speak well for him. I have said that no sector is immune from the credit crunch, which poses added difficulties. I have also said that we are looking at what we can do, but the point that I would gently make to him is that the Government are acting in relation to the credit crunch, whereas all we hear from the Opposition is “do nothing.” The £20 billion working capital scheme is precisely designed to get finance to the companies that need it. Instead of carping from the sidelines, he should support the measures that the Government are taking on recapitalising the banks and encouraging lending."

Bromsgrove MP Julie Kirkbride made the excellent point that proposed gas storage facilities need to win planning permission:

"Further to the exchanges that took place on gas storage, the Minister will be aware that there is limited geological scope for gas storage in the UK. How confident is he, in the light of the question asked by the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble), that the planning process will deliver all the gas storage sites, bearing in mind that the industry does not think that we have got enough even if they all go ahead?

Mr. Mike O'Brien: The hon. Lady will be aware that since the Planning Act 2008 became law last October, changes have been made to the planning process, particularly in relation to large gas storage projects. I am confident that some gas storage projects will go ahead, but that process needs to take place with a proper reflection on the ability of local people to voice their concerns and to say what problems might arise. We want reasoned and proper decisions to be made about all gas storage projects so that we get the gas storage we need, and we get it in the right place."

The Wintertons both had questions:

"Ann Winterton (Congleton) (Con): Energy demand is rising exponentially, which makes the issue of energy security even more important. New nuclear generation will play an important role in that. What discussions has the Minister had with colleagues in the Department for Business, Enterprise and Regulatory Reform to ensure that we have enough technical and engineering expertise for this country to play its part in the building of new nuclear generation facilities? Although the Prime Minister cannot in fact promise British jobs for British workers, because of European Union legislation, will the Government take a page from some other countries’ book and ensure that that happens by the back door?

Mr. O'Brien: Bringing on the skills that we need for the nuclear industry is enormously important. We know that we have an ageing work force in the nuclear industry at the moment, because for 20 years we were not building sufficient capacity. The hon. Lady is quite right about that. We have created the national skills academy for nuclear, built up Cogent and got the industry together to invest both in developing skills and, through Government and private sector funding, in university courses to build up the intellectual base that we need and ensure that we can not only expand nuclear in the UK but benefit from the worldwide expansion that is taking place.

T6. [260747] Sir Nicholas Winterton (Macclesfield) (Con): Earlier this year, wholesale energy prices dropped dramatically, yet the British consumer continued to pay record high prices for energy. Her Majesty’s Opposition believe that the Competition Commission should conduct an urgent investigation into the relationship between wholesale and retail prices. Do the Government agree, and will they ensure that such a review is undertaken?

Edward Miliband: It is good to reply to another Member who has a family connection in the House.

On energy prices, I do not think that at this stage a referral to the Competition Commission is the right way to go, because it would not be brief and quick. It would take a long time. That is the experience of referrals to the Competition Commission. I believe that the better way to go is what we are doing, which is pressing the energy companies to reduce their prices and pass on the price cuts, and introducing more transparency through the work of Ofgem, which published its first quarterly report on the connection between wholesale and retail prices earlier this month.

The hon. Gentleman’s general point that we need price cuts to be passed on to consumers is completely right. That needs a combination of tough regulation, consumers associations making their voice clear and the Government doing the same. That is what we intend to do."

(Ed Miliband is Foreign Secretary David Miliband's brother.)

Finally Peter Lilley showed his climate change sceptic credentials once more:

"Given that the Government say that we should accept the economics and science of the intergovernmental panel on climate change because they have been peer reviewed, and given that the methodology used by Sir Nicholas Stern has been repudiated by his own economists when producing the impact assessment on the Climate Change Bill, will the Secretary of State submit the Stern review to peer review?

Joan Ruddock: That is not at all our intention. The Stern review has been widely reviewed around the world, it is doing an extremely good job and it has been very well considered. I can tell the right hon. Gentleman, however, that we intend to produce a new impact assessment to the Climate Change Act 2008. I know that that matter is important to him, and that he has raised queries about it. We now know that there are things that have come to light since the Bill was originally drafted. The benefits of the previous impact assessment were valued using the shadow carbon price, and that is currently under review. We are also likely to find that the costs, which covered a very large range, were exaggerated at the time because they assumed no technological progress beyond 2010, and that the potential for international trading to reduce the cost of avoiding dangerous climate change was not taken into account. So that is good news for the right hon. Gentleman, and the assessment will be published on Monday."

All in all a robust and worthwhile session.

Tom Greeves