Queen’s Speech

Lord Truscott Excerpts

Wednesday 25th May 2016 Lords Chamber

[Lord Truscott (Ind Lab)]

My Lords, I too congratulate the right reverend Prelate on her excellent maiden speech. I will speak on energy in Your Lordships’ House today, given both its importance to Her Majesty’s Government’s programme and because of recent developments which imperil its stated aims.

It is fair to say that the Government’s energy strategy is not going quite to plan. The proposed nuclear power plant at Hinkley Point is in doubt; as we have seen, fracking for shale gas is meeting local popular resistance in areas such as Yorkshire; North Sea hydrocarbon companies are under pressure from the collapse in the price of oil, bringing with it redundancies and curtailed investment; and the renewable sector is in uproar following the axing of subsidies for solar and onshore wind power.

Our climate change commitments, briefly alluded to in the gracious Speech, together with EU directives, mean a loss of generating capacity with an increasing danger that the lights may go out in the UK if the Government fail to get their act together. Energy security—an essential prerequisite for any Government—may evaporate in the process.

A couple of weeks ago, for the first time since the 19th century, on several occasions the UK stopped producing electricity from coal altogether. More power now comes from wind farms than from coal, and solar produces more energy than fossil fuels. I am well aware of the need for energy security in the UK. In 2006, at the time the UK committed to a new generation of nuclear power, I was Energy Minister while Russia and the Ukraine had their first “gas spat”. Low carbon nuclear, with renewables, would keep our lights on while cutting our carbon emissions, and I strongly supported the promotion of both.

Ten years on, UK energy policy does not seem to have developed very much. True, renewables have expanded their share of the energy mix, but our nuclear programme has stalled and our hopes for the future seem to lie with French-owned EDF, the Chinese, and shale gas. None of these inspires wholehearted confidence, including on the board of EDF or within the French Government themselves. The willingness of Beijing to step in to guarantee our energy security seems like a contradiction in terms, and one which makes some security experts nervous.

Her Majesty’s Government believe that they have found a silver bullet with shale gas. Development in the UK, it is argued, would enhance energy security by reducing our dependence on imported gas from countries like Qatar and Norway. Shale gas, we are told, would boost the UK economy, generate jobs and benefit local communities. However, the evidence from elsewhere is mixed.

There is a growing body of scientific evidence, from the US and Canada, that hydraulic fracturing, or fracking, damages the environment and provides only a short-term boost to local economies, which can then collapse in a downturn, as is shown in today’s Financial Times. This has already happened in the States, where an increasing number of oil and gas companies are going to the wall. Just this April, 11 US energy companies applied for Chapter 11 bankruptcy protection, and altogether 130 American companies have gone bust, costing 130,000 jobs. The majors have largely pulled out of US shale altogether, and at the same time President Obama has announced a new crackdown on methane leaks from US shale oil and gas producers. Meanwhile, shale development in Poland has been mainly abandoned.

The global oil glut caused by the North American shale revolution, combined with declining Chinese demand and sustained Saudi, OPEC and Russian production, has caused a dramatic collapse in the price of oil, which has rubbed off on gas. The international oil companies have put on hold some $400 billion of future investment in new hydrocarbon fields.

The UK continental shelf is suffering, and at less than $50 a barrel is no longer in economic play. With Saudi determination to snuff out relatively high-cost shale in the US and maintain its market share, shale is destroying jobs overall rather than creating them. At current market prices, shale in the UK is simply not economic.

On the environmental side, the Government seem determined to ignore the evidence. When confronted with the evidence of thousands of earthquakes in Oklahoma, for example—584 in one year alone—the Minister, the noble Lord, Lord Bourne of Aberystwyth, told me that we should not worry because the “geology was different”. When informed of another authoritative report from Calgary University researchers and the Alberta Geological Survey linking earthquakes with fracking, the Energy Minister dismissed it out of hand.

The fact is that no one quite understands the science behind fracking. More worryingly, the Government do not seem to want to know because it debunks a key strand of their energy strategy, such as it is. By its very nature, fracking requires the constant drilling of new wells, as each well has a limited life expectancy, with production tailing off after about 18 months. Drilling hundreds of wells may work on the wide open prairies, but will that be the case in our national parks or outside Blackpool?

The technology of fracking cannot be uninvented. Unconventional and tight oil and gas will continue to be exploited by new technologies such as fracking and horizontal drilling in other parts of the world, yet in the dash for shale we should be aware that the energy world is changing. The G7 has demanded an end to all fossil fuel use by the end of the century. The world’s global energy mix will change radically by 2040, from a system comprising two-thirds fossil fuels to one where 56% of energy comes from zero carbon-emission sources. Saudi Arabia, seeing the writing on the wall, is seeking to end its dependence on oil and gas in 15 years. Electric cars, carbon emission restrictions and new technology will eventually make fossil fuels redundant.

In ensuring our energy security, we should take care not to unquestioningly embrace sources of energy which may do more harm than good to the environment, local communities and the country.