EU: Energy Infrastructure (EUC Report)

Baroness Byford Excerpts

Monday 29th July 2013 Grand Committee

[Baroness Byford]

My Lords, I begin by thanking the noble Lord, Lord Carter, for introducing the debate this afternoon. I remind the Committee that unfortunately, because of my husband’s illness, I was not able to take part in earlier discussions. Therefore, I will perhaps raise more questions today than other contributors will. I declare my interest as a farmer. We grow oilseed rape.

I will start with a certainty. As others have said, the EU Emissions Trading Scheme should be strengthened. Clearly it is not working at the moment. This should be addressed. I hope that the Energy Bill will encourage that to happen here. If it is not working here, one wonders what on earth is happening in the other countries of Europe. As the noble Lord, Lord Cameron, said, this country should take the lead. I am particularly disappointed that the projected income from it has failed to materialise. One of the areas to which the money would have been devoted is research aimed at perfecting a system of carbon capture and storage.

All across the world, coal and other fossil fuels are the main source of heat, light and power. I believe that they will remain so for many decades to come. A reasonable way of combating the carbon emissions involved is to trap them and store them where they can do no harm. Natural gas, which includes shale gas, produces 57% less carbon dioxide per kilowatt hour than coal. Even so, its emissions must be captured. The policy brief, A UK “Dash” for Smart Gas, introduced in March this year, contains a wealth of data that include the US Energy Information Administration figures on world recoverable resources of shale gas. Interestingly, China has the most. The United States is next, with Argentina third. The UK has a tiny amount by comparison, but DECC has stated in its Energy Security Strategy that it will,

“support new ways of tapping our indigenous resources, where this proves economic”,

and that it will carry out extraction,

“safely and with full regard for protection of the environment”.

Part of this protection will be carbon capture and storage. In a Written Answer of 20 June this year, the Minister pointed out that the 2013 Budget had announced the selection of two preferred bidders in the CCS selection competition. I understand that that progress will be assisted over four years by the Government’s £125 million R&D programme. That is a start.

Energy security has obviously been strengthened by efforts and investment in the renewables sector. I agree with others that it is slow and very varied. There is tangible evidence on the questions of onshore and offshore wind farms, the use of landfill gases, sewage sludge digestion and anaerobic digesters. Studies of barrage and marine turbines also have a role to play. However, the House of Commons report of 3 July this year stated that job and investment announcements in the renewables sector since 2010 show that in Scotland, £1 billion has the potential to support 697 jobs; in Northern Ireland 878 jobs; in England 1,287 jobs; and in Wales 1,395 jobs. What causes this variation, even in our own country, and what is the variation across Europe? Does anyone know? Does it matter? Are there things that we could change to improve it? Will it be more advantageous to site energy plants across the continent, or could enormous gains be made by locating them in one place in a number of regions? Does energy generation benefit from special factors, as our textile industry did in the 18th century?

Investment in renewables, broken down into English regions, shows an even greater variation than the one I quoted earlier for the countries of the UK. Hence, £1 million spent in the West Midlands has the potential to support 8.24 jobs; in the south-east, it would support 6.1 jobs; in the south-west, only 1.12; and in the east, which has had more than half the total recorded investment since 2010, it would support only one job. Is it possible that the explanation for these figures might indicate that certain types of investment in renewables would be better made in one place than another?

I turn to DECC’s annual report and accounts for 2012-13, and specifically to Table 8, “Total identifiable expenditure on services by function, country and region, for 2011-12” under Chapter 8, “Financial Core Tables”. Interestingly, expenditure in England on economic affairs was £393 million, of which £119 million was spent in the north-west. On environmental protection, the total for England was £1,644 million, of which the north-west had £1,044 million. DECC’s total spend in England was £2,048 million, of which the north-west had £1,165 million. Does this mean anything of which we really should take note? Is it an important message that should be considered in the energy security debate? If such variations are happening in our country, one wonders what is happening in other countries.

Will Europe’s self-sufficiency in energy be undermined by external forces? On 27 March, on Radio 4’s “Today” programme, there was a report that one of the big six UK power companies had completed a deal with the US to import shale gas in quantities sufficient to power 2 million homes. I have not heard anything further, so it may not have concluded into a firm deal, but what would be the knock-on effect if such deals were concluded in several or all European countries with supplies from China and Argentina as well?

As other Members have said, energy security is vital to our future, and is clearly recognised as such throughout the EU. I, too, have been disappointed by the lack of agreement on the ETS, the lack of progress on connectivity between us and the continent, and the obvious difficulties around carbon capture and storage. It was, therefore, something of a surprise to learn from the final paragraph of Annexe A of DECC’s Energy Security Strategy that:

“The US Chambers of Commerce produces an international index of energy security, from 1980 to 2010, for 25 developed and emerging economies”.

That index apparently stated that,

“since the 1980s, the United Kingdom has scored consistently in the top three most energy secure countries in the group of large energy users, and … ranks second after Mexico”.

That is good news, but we are an EU committee that looks across the EU. Clearly, in some countries where we took evidence this improvement is sadly lacking.

It may well be that historically we have been blessed with abundant coal, oil and natural gas. The outlook, however, is less satisfactory, with particular questions over security of supply, connectivity and affordability. Reports in the press, magazines and journals, and on the radio, make it clear that we are short of available people with the necessary skills to move from conventional energy supply to renewables. There are also concerns over the practical lifetimes of items such as solar panels and wind turbines. Issues of commercial confidentiality seem to prevent the publication of data on energy outputs, and comparisons between what is promised and what is achieved.

Everywhere I look I find contradictions that raise yet more questions. In his introduction, the noble Lord said that these questions were political rather than party-political, and that each member state must face them.

Under some of the resource headings that I looked at, Bulgaria’s electricity prices, in euros per kilowatt hour, are split between households and industrial units, and Bulgaria is the cheapest under both headings. Denmark is the most expensive for households at 0.298, but seventh cheapest for industrial uses at 0.093. Sweden is eighth from the top of the list for households, at 0.204, but sixth from the bottom for industrial use at 0.083. Is there any significance in this, and why is there a difference? Would we benefit from a clearer understanding of how such variance occurs?

I congratulate the committee, which, as I say, I joined only towards the end. It raised many questions, and three themes will stick with me. The first and most important is security of supply. Secondly, there is money around in the money markets, but people need decisions in order to make long-term plans. Thirdly, affordability is not just what it costs the individual but the implications that that has for businesses across Europe.