Russian Gas

Baroness Verma Excerpts

Thursday 8th May 2014 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, the UK currently sources less than 1% of our gas from Russia. Although we are not dependent on Russian gas, we are working with allies on actions to improve global energy security in response to the situation in Ukraine. The European Council agreed in March that the EU should intensify its efforts to reduce its dependency on imported gas and the European Commission will present a plan for the reduction of EU energy dependency by June 2014.

[Lord Higgins (Con)]

My Lords, I thank my noble friend for that reply and welcome the robust statements made by the Secretary of State. Does my noble friend agree that the events in Ukraine have exposed very clearly the dangers to which European countries are exposed as a result of the reliance on Russian gas? In the present and forthcoming negotiations, particularly at the G7, will my noble friend ensure that we press for action to countervail the present monopoly power of Russian supplies and strategically do everything we can to diversify the sources of power to European countries generally by improving terminals, pipelines, the capacity of gas-carrying ships, and so on? I appreciate the point made by my noble friend that we are less directly affected than most other countries but none the less we have a general economic and political interest in this. I hope that we will pursue these matters.

[Baroness Verma]

My Lords, my noble friend is right in all those points. Of course, the key to ensuring less dependency on a particular source is having greater diversity. That is what we are trying to do. We are encouraging member states to promote and explore other options for other sources. As my noble friend said, there are a number of areas we are sourcing from, which makes us less dependent on imports from other countries. We are having this discussion and my noble friend was right in saying that the Secretary of State was very firm in putting forward his points of view.

[Lord Teverson (LD)]

My Lords, I very much welcome the Secretary of State’s strong statements to energy Ministers at the Rome G7. However, we had a lot of similar statements in the 2008-09 Ukraine gas crisis and very little has been done since then. Why does my noble friend think that we will be more successful in making sure that this major change in European gas supply happens this time?

[Baroness Verma]

My Lords, my noble friend is absolutely right. It is about concentrating our minds. This issue has focused everybody’s minds. He is right that we need to do much more to press our partners. The G7 energy Ministers are meeting again in June to commit to immediate actions. Among those will be emergency plans for the winter of this year and we will be looking at how we can offer assistance to those countries that want to have greater dependency on their own natural sources.

[Lord Jenkin of Roding (Con)]

My Lords, is not the Question of my noble friend Lord Higgins extremely timely given yesterday’s publication of a very important report by the Economic Affairs Committee? It made the point that the rapid and effective development of shale gas in this country is one of the real steps that we could take to reduce Europe’s dependence on Russian gas. Can we assume an early acceptance of the very important recommendations of this report?

[Baroness Verma]

My Lords, my noble friend is absolutely right. The report will be considered fully but we agree with my noble friend that shale gas will play a huge part if it can be explored properly and we get from it the full potential that we expect.

[Lord Hannay of Chiswick (CB)]

My Lords, does the Minister agree that one area of increasing energy security involves increased gas storage? Can she say whether the Government are giving any attention to that? Does she recognise that the United Kingdom’s position on gas storage is much weaker than the positions of most other member states, particularly Germany, and that if we are to be less open to blackmail from outside, increased gas storage will have to be part of the equation?

[Baroness Verma]

My Lords, I do not agree with the noble Lord. We have significant gas storage in place. Two units have recently been completed and two are in the process of being built. We have more than enough gas available to us. We should not underestimate the amount of dependency that we have on our own sources to be able to provide energy for our country.

[Baroness Worthington (Lab)]

My Lords, I agree with the Minister that diversity is the answer to this problem. Will she comment on what the Government are doing to encourage the greater use of renewable gas in our markets? A report in 2009 from the National Grid identified that up to half our domestic demand for gas could come from renewable sources. It is currently being used in the much less efficient generation of electricity and it should be used in the heat market.

[Baroness Verma]

The noble Baroness is right. We need to look at all aspects of usage of our energy supplies. But this feeds into a much wider question which will take a little longer to debate. The bigger point is that we need to ensure that we have a diverse mix of energy. That is what this Government pledge to do.

[Lord Lawson of Blaby (Con)]

My Lords, I welcome my noble friend Lord Jenkin’s point about the important report by this House’s Economic Affairs Committee published today on shale gas and our indigenous resources. This is a massive opportunity for this country. Does the Minister agree with the committee that unless the Government streamline the regulatory system and unless they get their act together, this massive opportunity will not be realised?

[Baroness Verma]

My Lords, my noble friend is right to raise the benefits of shale, but he will also be aware that we are looking at streamlining. We have streamlined the process. We are also reducing the tax on the proportion of a company's production from 62% to 30% at current rates. The Government are doing a lot to be able to ensure that those hurdles that may hinder the exploration of shale gas are removed, but we need to follow proper procedures and ensure that we also look at all the environmental impacts of shale exploration.