Energy Security

Alan Whitehead Excerpts

Thursday 8th July 2010 Westminster Hall

[Charles Hendry]

We have always said that gas storage is part of the mix. If we have long-term contracts, under which we know gas is not being bought on the stock market, and it cannot simply be delivered and put through the pipeline, gas storage is part of enhancing energy security. We are keen for more of those facilities to be brought to fruition. There have been significant blockages caused by past planning constraints and the changes the previous Government made. We are enhancing arrangements, which will help to address some of those issues. There are continuing problems with the rate at which cushion gas—the gas that goes into the bottom of the storage facilities and is never actually taken out—is taxed. There are non-financial challenges as well. Gas storage is part of the picture, but there is a wider picture, too.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I believe that the figures for UK gas storage are about 4% of average annual consumption, compared with 21% in Germany and 24% in France. However, the UK is still a very substantial producer of gas—there is effectively gas storage waiting to be tapped. Furthermore, Britain now has two liquefied natural gas terminals installed and working. Taking those factors into account, although it is certainly necessary to increase gas storage, does the Minister accept that the picture is not remotely as was set out before and immediately after the election as far as long-term threats to gas storage and gas storage itself are concerned?

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[Dr Alan Whitehead (Southampton, Test) (Lab)]

The debate is about energy security. As the Minister emphasised, the debate on what we do with energy policy over not only the next five years but the next 30 or 40 years is essential. In that context, I am rather sad that such a small but select gathering is here to debate the issue. Energy security should be at the heart of all the decisions that we make on energy policy in the narrowest sense. However, in the wider sense, it should also be at the heart of how we plan our resource use, the energy efficiency mentioned by my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) and the deployment of our transport resources. All those matters relate one way or another to the question of how secure our energy supplies will be and how we will deploy our resources to ensure that the lights go on, transport moves, industry is secure, the country remains economically prosperous and we remain secure in our homes. Energy security is as central as that to our way of life in the future.

As far as energy security is concerned, we live in a very uncertain world. We have challenging and serious commitments to meet to ensure our energy security in the context of the rapid decarbonisation of our economy. We need to make sure that our supplies and our energy production are secure in the context of moving from a high-carbon to a low-carbon economy in a short time. In talking about the path from here to 2050, we should reflect that in the past 40 to 50 years we have in any event rapidly changed the mix of our energy economy. We have moved from dependence of about 90% on coal for energy to a figure of about 12% to 15% in 40 years or so. I anticipate that there will be similar rapid change in the next 40 years. The question is whether that change can be accomplished in accordance with the energy security considerations that I have set out.

As to some of the assumptions that continue to be made in some quarters about how energy supplies in this country will go, I fear that the answer may be a distinct question mark. For example, to take as a starting point our continued dependence on oil, world oil resources are presently set at about 42 years. That is on the basis not of all the oil reserves in the world, but of all those that it will be reasonably possible to exploit, and that there is a reasonable likelihood of our knowing about in the not-too-distant future.

There is at the same time a dash to secure oil supplies. Recently China has been rapidly attempting to exploit and secure oil reserves in Africa, and other world economies are pursuing the same tactics. Therefore, the idea that there will be a ready supply of oil at a reasonable price—a price that can sustain our economy—while our North sea oil reserves are reducing is at the least an interesting one. I am not a peak oil alarmist but the very interesting recent report by my right hon. Friend the Member for Croydon North (Malcolm Wicks) on energy security in a changing world went into the question of peak oil and the point at which, although reserves will exist for a longer period, production relative to demand will be decreasing. It is suggested that that will happen from about 2030.

[Emily Thornberry]

Does my hon. Friend agree that although our oil production from the North sea will decline at a rate of between 6% and 10%, it will nevertheless continue to play a vital role in our energy mix in the next 10 to 20 years?

[Dr Whitehead]

Indeed, it will continue to play that role, and the fact that we have indigenous sources of oil, as it were, will be something of a proof against increasing vicissitudes in the rest of the world. Nevertheless, that continued oil production is not divorced from peak oil considerations—it is an essential part of them. The likelihood, therefore, that by 2050 oil will, because of its scarcity, have to be used primarily for non-vehicular purposes such as making plastics and other chemical necessities, should be taken into consideration in our long-term thoughts on energy security.

The likely scenario in the next few years, should that analysis be even remotely correct, is that the world will continue, among other things, to attempt to defend its oil interests by covert or overt military means. Indeed, a little while ago Dan Plesch of the Foreign Policy Centre estimated in a paper that the cost, indirectly or directly, of defending oil interests from a military point of view came to about $150 billion a year. If we consider the areas of the world—mainly in the middle east—that have been defended in that way, and the likely reserves in those countries, that comes to about $20 per recoverable barrel. That is an interesting reflection on what is likely to be the increasing additional cost of oil in the next few years.

In the context of climate change and our ambition to reach the targets we have set, it is absolutely right that energy efficiency will play a substantial role. Indeed, if EU energy efficiency targets of even 20% are met by 2020, that will result in something like a 13% reduction in electricity use in the EU. That underlines the key role of energy efficiency. I am completely with the Minister as to the key role it must have in our energy security—another example of protection of the home front in energy matters. However, the changes in our energy economy that will result from a far lower dependence on oil in the long term will almost certainly mean a much higher dependence on electricity for, among other things, transport, particularly with the rise of electric vehicles. At least part of the energy efficiency gain will be offset by increased demand for electricity as electric transport becomes increasingly the norm.

My hon. Friend the Member for Islington South and Finsbury has already dismissed some of the scares and myths about gas. It is true that the short-term alarms about energy security that have recently been raised in relation to gas are largely unfounded, for the reasons we have heard today. However, there is another reason, which has not sunk widely into our consciousness but is nevertheless important. Part of our gas energy security has been derived not only through interconnectors—which, as has been observed, can work both ways, and did during our cold winter, with movement out of the UK as well as into it—but by ensuring, pretty much as a deliberate act of policy by the previous Government, that there was sufficient liquid natural gas landing capacity. There was a substantial increase in that capacity. Of course, liquid natural gas is a world-traded commodity and one might ask how secure it is likely to be. One reason why it is likely to be far more secure in the not-too-distant future is the rise of shale gas, particularly in the United States. Gas is extracted from shale beds in a way that was not technically possible a few years ago. Its exploitation in the past few years has, among other things, added about 25% to estimates of United States gas reserves.

I might add that gas is not a particularly benign fuel for the environment. It is not as intense, in relation to CO₂ emissions, as coal, but it is very intense nevertheless, and was the subject of a recent letter from the Committee on Climate Change recommending that future gas-fired power stations, as well as existing and future coal-fired plants, should be CCS-adapted. We should not for a moment believe that gas is the alternative or the answer to the end of the oil economy or the diminution of the coal economy. Nevertheless, shale gas in the US and elsewhere has transformed the picture in recent years of likely gas reserves. Indeed, the liquid gas receipt terminals in the United States built for the same reason as those that were built in the UK are, in effect, standing idle because of the change in the gas economy that has resulted from the emergence of shale gas.

Incidentally, shale gas poses an additional problem, as it is no more environmentally friendly than any other form of gas—it is, in essence, the same stuff—and the technology of fracturing rocks to extract it results in substantial emissions of methane into the atmosphere. Indeed, the chemicals that are used in its extraction are particularly climate-unfriendly, so it is not a panacea. I merely note that as an addition to the debate on where we are on gas security.

All things considered, even with the increase in reserves in particular countries, it is likely that gas has perhaps a 60 to 70-year exploitation against production life ahead of it. For two of the key elements of our energy economy, we are living on borrowed time, and we need fundamentally to recognise and understand the consequences for our own energy security that the post-peak world oil economy and, to a lesser extent, gas economy will introduce—this country will either have to scramble for those resources or go in a different direction—and how those scenarios will play out over the next 40 years.

I have not mentioned coal. This country has some 200 years of coal reserves, and there is a similar level of likely reserves against production around the world. Indeed, in looking at how our future energy economy might best be fashioned, it seems inconceivable that we would ignore the role of coal—with, I trust, carbon capture and storage firmly attached to it, because of our carbon abatement commitments. Nevertheless, using coal as a substantial part of our base-load energy economy over the next few years is not just a good idea for balance in the energy economy but an important part of our energy security considerations.

The starting point for energy security probably has to be a common-sense view. Politicians always feel that people should be wary of common-sense views—on occasion, that means they come up with views that are precisely the opposite—but, in the case of our energy security over the next 40 years, a common-sense starting point ought to be that if we should produce as much of the energy required in this country from sources that we control, and that we do not set too much store by sources that we do not control.

That is a common-sense absolute which, of course, is mediated by a great many factors, not least the interconnection and balancing of supplies, and the role of the European Union in how supplies work, but in a world with all the dangers, concerns and scarcities that I have mentioned, a common-sense starting point ought to tackle the issue of how we deploy our energy resources over the next 40 years. The question that then arises is whether the UK can be energy self-sufficient in the way that it has been in the past. If that common-sense principle were applied to our future energy security, we would be talking about an energy economy in which, yes, oil and gas—particularly North sea gas—will have a role, but, increasingly, biogas produced from our own indigenous natural resources could be injected into the grid and take the place of mineral gas coming from the North sea to a surprisingly large extent.

I am not sure that setting an enormous amount of store by a technology that relies on a fuel of which we produce not one ounce in this country is a common-sense view. Setting aside any of the questions at the front of our minds about build scale, commissioning, public subsidy and other aspects of nuclear power, we must remember that, because nuclear is not renewable, it is reasonable to ask questions about the security of supply of uranium for reactors, should we build them in this country. This is not necessarily to take a side on the nuclear debate but simply to ask that question.

Given the likely reserves of uranium—on the present supply against production—its life is roughly that of oil: 40-odd years. However, if there were a large number of nuclear builds over the next 20 years, the amount would come down dramatically. On present figures, it appears that uranium could become scarce during the lifetime of a future nuclear reactor built in this country. That ought to raise a question mark about energy security, and about the role that nuclear may play in future considerations for the UK.

Indeed, given our concerns about our carbon dioxide emissions and footprint, new supplies of uranium would need to be found. Otherwise, existing supplies would be depleted, and the richness of uranium per tonne of rock mined would be so low that the carbon footprint would eventually equate to that of a gas-fired power station. That would not follow the low-carbon footprint route for our energy supplies in the long term. The figures relate to Australian and, to some extent, Canadian supplies of uranium. There are richer supplies in places such as Kyrgyzstan, but they raise the same questions for energy security in an uncertain world set against supplies of oil and gas.

Ironically, we could increase our supply of uranium by sequestering supplies that are kept for military purposes and translating them to domestic nuclear purposes. If we did so in this country, we could double the life of our uranium supplies without taking uranium from elsewhere, which raises the interesting question of developing a domestic nuclear power programme to thwart a military nuclear programme, but perhaps that is a debate for another day.

I asked whether the UK could be energy self-sufficient in future. The answer is yes, but the best energy security in this changing world will probably come from forms of collective energy security which, at the very least in Europe, ought to be at the forefront of our minds. We have heard some bad stories about connectors, but the more connectors this country has with Europe, the better off we will be not just in terms of our own energy security but in terms of Europe’s as well, for reasons that I shall come to in a moment.

We should also consider new connections. The programme ought to be imaginative in terms of the connections within Europe and making the most of Europe’s energy supply resources. We should, among other things, go further forward from having point-to-point connections for future wind farms in the North sea, for example, and connect those supplies across Europe in what is called the supergrid—it is, in fact, a sensible addition of connectors with nodal hubs, particularly in the North sea—to ensure that the transferability of energy supplies is complete. Of course, we have a gas supergrid in Europe and there is, effectively, the beginnings of an electricity supergrid. An essential part of our future energy security is a supergrid for renewables.

The things that I have just mentioned are just part of the answer to the question, “Can we be self-sufficient in our energy supplies over the next 40 years?” The facile answer to that question, which we occasionally hear, is, “Why, oh why, can’t we be self-sufficient in our energy supplies, because we are the windiest country in Europe, with the biggest tidal range and the biggest effective waves in Europe? We must be able to be energy self-sufficient, mustn’t we?” It is true that we have the biggest wind supply and the greatest tidal range of any country in Europe and we have the largest range of facility of any country in Europe, but that in itself does not answer our question. The analysis in a recent report by the offshore valuation group entitled, “The Offshore Valuation: A valuation of the UK’s offshore renewable energy resource”, is increasingly providing an answer.

The group eschewed the idea of going for the big picture or saying, “We’ve got all the resources, therefore it must work”, and instead did a sober analysis, area by area, of this country’s renewable offshore resource, looking at where the constraints were in landing, or depth of offshore water, and considering what proportion of our theoretical resource could be landed, assuming the investment was there to make the landing possible.

The group assumed a relatively modest proportion of the total practical resource, setting aside those areas where constraints were likely to be insufficient to render exploitation practical. It suggested that only about 29% of the practical resource would be harnessed by 2050. On looking at that resource, it found that the full practical resource of 2,131 terawatt-years exceeded UK electricity demand six times over. The practical landed resource would, on that basis, not only easily be able to deal with the UK’s practical demand, but would make the UK a substantial net electricity exporter. Incidentally, that figure would be likely to encompass the spike in electricity demand—and the difference that that would make to our energy economy—from electric vehicles.

The group included a number of scenarios in its report. The middle range of scenarios, under which there would be 29% of resource utilisation, would mean an install capacity offshore of about 169 GW, capital expenditure of just over £400 billion over the period to 2050, and annual revenue of £62 billion, and thus a substantial income-generating capacity for the UK. The UK would also be a net electricity exporter, after all the demands here were taken into account. That brings the connectors into context. We have always assumed that connectors are based on the idea of balancing the UK system, so that energy comes in from abroad when the UK does not have sufficient resource of its own. The prospect of the UK systematically exporting from its connectors is a secure foundation for our energy security considerations in future.

The report also considers a matter that a number of people have considered: whether the UK energy economy can stand the penetration of renewables in a scenario such as the one that I have just mentioned, which suggests that a penetration of renewables of some 50% would be the consequence of such practical exploitation of UK offshore facilities. It also adds floating wind and tide and wave to fixed offshore wind, as technologies that would be deployed in respect of that outcome. That scenario suggests that it is necessary for the energy economy to have a reserve of some 34 GW, which is getting on for 50% of the present total capacity of our electricity supply, to balance the 50% renewables penetration. The report is also clear about the changes that are taking place, as the Minister mentioned, in respect of the smart grid, energy efficiency considerations, storage, the continuing use of inter-country connectors and the role that small-scale generation plays in the energy economy, all of which would have a substantial hand in ensuring that the balance was possible under that level of penetration.

The long-term answer to the question, “Should we, from a common-sense point of view, source as much of our energy as possible from indigenous resources?” is yes. The answer to the question, “Can we source as much energy as possible from indigenous resources?” is also yes, but neither of those answers is based on fanciful assumptions about how our energy economy might develop. There are realistic scenarios for the next 40 years, showing a change in the relationship between our energy supply and our energy use, and a change in the make-up of that relationship in such a way that our energy economy is fully secure by 2050, against what we know will be increasingly violent vicissitudes in the world energy economy. If we can achieve that starting on this Government’s watch—great progress was made on the previous Government’s watch—not only will we secure our energy supplies for the future, but we will secure our carbon commitments at the same time, which is the other key element.

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[Charles Hendry]

It is a continuing pleasure to serve under your chairmanship, Miss Begg. We have had a high-quality debate. Our numbers may have been limited, but we have touched on many of the key issues that go to the heart of the debate on energy security, and some of the big structural issues, as well as some of the more localised policy issues that go with that. During the next two hours, I hope to go through those in significant detail.

The hon. Member for Islington South and Finsbury, who speaks for the Opposition on these matters, started by talking about big government. She asked whether we need big government in this area, and said that we cannot leave such matters to the vagaries of the market. We are in no doubt that the Government must provide leadership in such matters. The old Lawsonian approach of leaving them to the market worked when we were awash with our own oil and gas, and companies throughout the world wanted to invest in the United Kingdom, but we must now climb an extraordinary mountain of new investment, and we must appeal to companies headquartered in France, Germany and elsewhere around the world, so we need greater Government leadership and engagement. But we are also a party committed to decentralisation. Setting a policy framework to stimulate investment is not incompatible with allowing decentralisation of power. We are genuinely committed to allowing communities to decide what is right for the development of their areas, and to empower them to make those decisions.

Clearly, above a certain level—the 50 MW threshold—such things will become nationally significant infrastructure projects and decisions will be taken centrally. I will come on to those planning issues later, but we are committed to the principle of decentralisation.

That is also true for electricity generation more generally, and the roll-out of microgeneration. We inherited a target of 2% of electricity to be provided by microgeneration by 2020. That is unambitious, and I agree with the hon. Member for Hartlepool (Mr Wright) when he said that we now have a real opportunity. As he said, not just for individual households, but for community groups, schools and groups of houses, microgeneration will often be a more attractive way of achieving economies of scale and the best possible investment. Within that framework, we must look at which technologies will be right for different parts of the country. There is no doubt that the generation capacity of solar power is greater in the south than it is further north. We cannot necessarily have a variable rate of feed-in tariffs for different parts of the country, but there will be other areas where biomass or small wind energy systems or whatever will be more appropriate. We must make sensible choices about how best to use the resources available.

The hon. Gentleman spoke about the role of the Government and how we can develop long-term contracts, and he mentioned the work of the Chinese and others. We are committed to that, and the Prime Minister has said that he wants Ministers to help secure such long-term contracts. In the past, if there was a new big gas deal to be signed, we tended to find that the French would send President Sarkozy, the Germans would send Chancellor Merkel, and we would send the British high commissioner, who is no doubt a fine man or woman, but they do not have quite the same clout and sense of national significance. We are determined to raise the profile of the Government when trying to secure such agreements. Of course, there will be differences of approach between us and the Chinese in such matters, but we must show those countries with whom we would like to be strategic partners the importance that we attach to such a relationship. There should be no doubt about that.

The hon. Gentleman also asked about elements of the coalition agreement. We have said that we will reform the regulator, and in general we believe that any regulatory activity is crucial and must be independent. It should be carried out within a framework set by the Government. Part of our anxiety has been that the excellent work of Project Discovery carried out by Ofgem should have been done by the Government. The Government should have stated their priorities and explained where the balance between low-carbon energy and security of supply lay. We must take the policy framework back within Government so that the regulator can be responsible for regulating within that framework. The hon. Gentleman also mentioned ensuring the security of supply. Again, the regulator should be charged with finding the best way of ensuring that people, particularly those who are using gas in the mix, have ways of meeting demand. There will still be flexibility in how that is achieved, and that should be a further additional role for the regulator.

The hon. Gentleman asked about the annual statement that will come before the House shortly. It is intended as a forward look. It is not supposed to be a meaningless selection of warm words, but rather an annual hard look at the challenges that we face and the progress we are making towards meeting those challenges. Normally, we would expect it to include a winter outlook, but given the time of the year in which we are doing it, it might be a bit early for that. However, we certainly want to give hon. Members the chance to question us robustly in the House about the security arrangements for forthcoming winters.

I hope that that reassures the hon. Gentleman about the underlying principles. I also want to reassure him that for me, energy security lies at the heart of any energy policy. As I said in my opening remarks, if we do not get energy security right, the low-carbon agenda will become much more difficult and the issue of affordability will go out of the window. Energy security is a core part of our policy.

The hon. Member for Islington South and Finsbury rather implied that everything in the garden had been perfect until 6 May, when it suddenly went catastrophically wrong. In the spirit of coalition politics, I am willing to say that the last Government made some moves in the right direction, but there were other things that they should have done and failed to do, or did not do until it was too late. Had we not had a five-year moratorium on nuclear power, those decisions would now be well in hand and we would have concrete going into the ground and the process would be under way. Had we not had countless Green Papers, White Papers, policy reviews, new Acts of Parliament and 16 Ministers in 13 years, we might have had greater focus on some of the challenges that we face. We are trying to respond to the challenges that we have inherited, and I will list the ones mentioned by the hon. Lady.

Gas storage is a particularly important matter and the concerns that we expressed earlier in the year were well founded. However, those concerns must be seen in context. Although they were raised during the winter, they looked ahead not just to that winter but to the outlook that we imagine will develop in the years ahead. The Government’s low carbon transition plan painted a picture that suggested that the volume of imports would not change over the next decade, and that the use of gas was supposed to come down sufficiently fast that imports could be maintained at the same level. Nobody in the real world believes that. Many people, including key industry observers and analysts, believe that 70% or 80% of our gas will be imported by 2020. If we do not start to take action now to ensure our security of supply with that level of imports, we will reach such a situation and it will be critical and unachievable. We recognise that at the moment, the short-term outlook is relatively benign for a range of reasons. We must take steps now to address the situation.

I recognise the crucial contribution that Langeled and the liquefied natural gas facilities have made. As the hon. Member for Southampton, Test (Dr Whitehead) said, just because we have a facility does not mean that it will be used. The LNG facilities are often on tankers that set off around the world without a particular market in place, and they will go to the highest bidder. That is not the cheapest way of getting gas, but we can get it if we are prepared to pay more than anybody else.

[Dr Whitehead]

My point about the current idleness of United States LNG terminals, and the changes in the US gas market as a result of shale gas, means that the LNG market is substantially changed regarding the destination of those supplies to countries other than the US. Therefore, on a worldwide basis, the LNG arrangements have begun to be altered by that factor over the past few years. My point was about the role of LNG in our energy security considerations, and the extent to which, should there be issues of gas supply in the UK, LNG now appears to be a better option than has been the case over the past few years.

[Charles Hendry]

There is no doubt that the situation has become more benign as a result of the discoveries of shale gas. We are still trying to establish how substantial we believe shale gas to be, and at what cost it can be extracted in the United Kingdom and over what time scale. It is a game changer in the United States and, as the hon. Gentleman suggests, it has virtually wiped out its LNG imports. We think that it will be significant in China and may change the dynamics of new pipeline connections within central Asia. We think that it will be large in places such as Poland, but we do not yet have a full grasp of the implications for the United Kingdom. It has undoubtedly meant that more gas is available for our LNG facilities than there would otherwise have been. As a precautionary approach, we must look long-term at our vulnerabilities and our exposure to imports, and ensure that measures to protect security of supply are in place through storage and long-term contracts. Those areas were all set out in our policy paper ahead of the election, and a range of issues will be used to address the existing challenges.

The hon. Member for Islington South and Finsbury spoke about how the last Government had doubled the amount of renewable energy. She managed to get the UK to No. 26 in the European Union, which was undoubtedly an enormous triumph. I think that we are just ahead of Malta, but have slipped behind Luxembourg, which is obviously a desperate blow. Frankly, it is not a good place to be and we need a sevenfold increase over the next decade to get us where we need to be. That is a massive challenge and more must be done across the spectrum.

There is an issue about winning public support. We believe that renewable energy should not be imposed on communities, but should have popular support within communities. The previous Secretary of State, the right hon. Member for Doncaster North (Edward Miliband)—now shadow Energy Minister before he moves on to his new job—has spoken of different techniques. First, he said that people should have wind farms because it would be good for everybody. That did not really win people’s hearts and minds. He then said that people should have a wind farm because it would be bad if they did not—a bit like somebody who drives across a zebra crossing without stopping—but that did not win hearts and minds.

We think that a new approach is necessary that will actively engage communities in ensuring that they see what the benefits will be. They will keep business rates locally. We will find ways of encouraging community ownership. The income stream from one of the turbines perhaps goes directly into the community, so it can see that it is hosting something on behalf of the wider region or the national interest and that a real benefit comes back to it for hosting the facility.

I agree with some of the comments from the hon. Member for Southampton, Test. Because of the inherent flexibilities in the system, one has to consider how one manages that. One has to have back-up systems or use what I hope will become a particularly exciting area of policy—storage technologies. Those can involve compressed air, pumped storage, hydrogen and batteries. The pace at which global technologies are moving forward in that area is very exciting. It offers us eventually the great prize of renewable energy from wind being available when people want it, rather than simply when the wind provides it. I think that that will be an important part of policy.

The hon. Gentleman also talked about the smart grid. That is the great prize of smart metering—the ability to manage demand much more effectively and to try to ensure that we can shave off demand at the top and have a sensible structure for managing the system.

Let me move on to some of the other technologies that were raised. The hon. Member for Islington South and Finsbury rightly spoke about nuclear. We would be further ahead had it not been for the moratorium, but the position of the Government now is absolutely clear. Nuclear will be part of the mix if it can be built without subsidy. There are no ifs or buts; that is an absolutely clear position.

I hope that the hon. Lady will work with us, because in opposition, I was very happy to work with the Government to reassure potential investors, to the extent that I was asked to go to the investors forum a couple of years ago so that investors could be told that the potential new Minister, if there was a change of Government, was attending and could give that continuity of policy. Investors attach enormous importance to that political stability. I hope that, given that the position is absolutely clear, the hon. Lady will decide that she wants to be a serious contributor to the debate, rather than making political comments from the sidelines, because that will do more to undermine the case for new investment than anything happening elsewhere. There are communities up and down the country that want to see parties working together on this issue. We have a clear position, which is essentially the same position as that of the previous Administration, and I urge her to work with us.

An important point about the changes that we are making is that we have said that the national policy statements will be voted on on the Floor of the House. That will send a clear message to investors that there is massive cross-party support for the national policy statements when they are put forward. I hope that that will be the outcome of that process. It is not just a political party saying, “This is our position,” but the House as a whole expressing its view on the national policy statements. That makes the process more robust, reduces the risk of judicial review and enhances the prospect of making progress.

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[Charles Hendry]

I am sorry, but I should already have done so, as the hon. Gentleman raised the matter earlier.

We believe that some of the things that the regional development agencies have done were truly strategic, but that others were slightly artificial. People’s view of RDAs is different in the various parts of the country. Having been to see One NorthEast, it is clear that the area had a better sense of regional identity than in my region of the south-east. There is not an enormous amount binding the western end of Oxfordshire with eastern Kent; people have different perceptions in different parts of the country. However, there must be rationality.

Most coastal RDAs say that they are the No. 1 place in the United Kingdom to develop offshore wind facilities, but they cannot all be No. 1. If we are trying to attract big international investors, there may be a case for considering the wider national interest rather than breaking things down further. However, RDAs have undoubtedly done some exceptional work. For example, Yorkshire Forward has been considering how to put a carbon capture and storage infrastructure in place; it is ahead of anything else in England. I hope that some of that work will be continued, even if RDAs are not part of that future—they may be in some parts of the country—but local authorities, which are responsible for business development, might see it as a particular advantage for their communities, and be keen to ensure that it is part of the mix. Again, I am happy to visit the north-east to talk to those in the RDA about how we can build on the work that has already been done.

The hon. Member for Islington South and Finsbury spoke about carbon capture and storage. I shall answer directly some of her questions. She asked whether every new plant built after 2020 would be required to have full CCS. The position is as it was under the Labour Government, which is that they will be required to have CCS or that it should be retrofitted in due course. An important aspect of the levy is that it can be used for retrofitting in plants used in the pilot projects.

The hon. Lady asked whether the four plants would all be coal or whether one would be gas. We are considering the recommendations of the Committee on Climate Change, which said that we should be doing a pilot project on gas. We need to consider the balance, deciding whether one of the four should be gas or whether the first four should be coal. There is no doubt in our minds that coal is the imperative. Coal is the greater polluter; it is where the technology is closer to the market. The focus is very much on coal, but we were pleased that the levy was changed under the Energy Act 2010 to allow it to be used also for developing gas and biomass technologies. The hon. Lady also asked about the emissions performance standard. We are indeed committed to putting in place an emissions performance standard, and in the near future we will be setting out our thinking and how we intend taking it forward.

The hon. Member for Southampton, Test always brings a huge amount of wisdom and experience to such debates, for which I am grateful. He spoke about the oil sector. I agree with him on the subject of peak oil. Realistically, we will not know when peak oil has happened until some time afterwards. However, Nobuo Tanaka of the International Energy Agency spoke earlier this week about the need to bring down demand ahead of the peak in supply. If we can get the peak in demand to come earlier, consumers will benefit because the price of oil will drop dramatically. If the peak in demand happens after the peak in supply, the oil companies will benefit because they will be able to ramp up their prices. For me, that shows the imperative to decarbonise society and to move ahead more quickly.

We have talked of energy efficiency today; that will clearly be part of the solution. We shall need to decarbonise ground transportation, but we also need more low-carbon methods of electricity generation. In looking at the way forward, we need long-term vision. We must decide what steps should be taken now in order to pre-empt the inevitable; the situation will become more challenging over time, and we must try to ensure that society and the nation decarbonise.

I pick up on what the hon. Gentleman said about international reliance. I was intrigued by some of his comments. It appears that he is willing to accept it in some areas but less so in others. For example, we get most of our coal from imports, Russia being the single largest market from which we buy, and we will become increasingly dependent on imported gas from Norway and Qatar. I am not sure whether he wants to see the closure of the LNG facilities, but picking out nuclear and uranium as being something that we import was slightly perverse in the wider context. Diversity is as important as our domestic resources. We enhance our security of supply by having a range of methods of electricity generation and different sources of supply.

[Dr Whitehead]

The hon. Gentleman is right to emphasise the fact that the aim of being as energy self-sufficient as possible does not necessarily mean that we should cut off all other sources of energy supply to achieve that goal. Indeed, a 50% reliance on renewables means that we are 50% reliant on non-renewables, which may be sourced from places outside the UK. My point about uranium was not to question the supply sources, but to bring into view the idea that there may well be a peak uranium issue in the same way in which there is a peak oil issue and whether we ought to factor that into our considerations of the long-term supply of that particular source.

[Charles Hendry]

We undoubtedly have to factor in such a consideration. There is 40 years’ supply of ground-based uranium, but there could be 1,000 years of supply of water-sourced uranium. We may also need to consider other technologies such as thorium power, which clearly does not have the same weapons risks, to see what role they might play in the future.

Let me finish on an area of common ground. The hon. Member for Southampton, Test discussed international grids and connections on the electricity side. That is a very important aspect of our security, and it means that we can consider how to address some of these challenges on an international basis rather than seeing ourselves purely as an island in which we have to generate all our own electricity and all our sources of energy domestically. Moreover, it means that there are parts of the world that will inevitably benefit greatly from that. Potentially, we could have hydropower coming in from Scandinavia, geothermal energy from Iceland going to the southern part of the European grid, and electricity coming from concentrated solar power in the Sahara. That is what makes this such an exciting brief. The opportunities are utterly different from anything that has existed before, but we must have the mindset to succeed. We need a long-term vision that goes beyond 2020 to 2040 and 2050, and we have to consider building all the facts into a map so that we can see where all the potential sources may arise. The underlying principle has to be that energy security is the driving force of our policy in this area. If we can get energy security right—and we have touched on so many of the issues in the course of the debate today, for which I am truly grateful to the hon. Lady and hon. Gentlemen—we will put in place a system that will pass the test of time, move us to a genuinely low-carbon society and keep the affordability issue right at the top of our minds as well.

Miss Begg, we are grateful to you for chairing our discussions this afternoon. I hope that I have answered some of the questions that have been raised during the course of this debate.

Question put and agreed to.