Energy Security

Charles Hendry Excerpts

Thursday 8th July 2010 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am grateful to you, Miss Begg, for calling me to open this important debate on a subject fundamental to our country’s future. Energy security is a high priority on the Government’s political and economic agenda. Our view is that energy security and climate change go hand in hand and must be addressed together. At the moment, we need particularly to secure new investment in the United Kingdom’s energy generating capacity in order to compensate for facilities that will soon be decommissioned.

We have inherited a situation in which, although there were many targets, it was not always clear how those targets would be met. We intend and are determined to secure our energy supplies by increasing diversity and being competitive and energy-efficient, but we must recognise that we face one of the most significant energy challenges in Europe.

Over the next 10 to 15 years, we must secure about £200 billion in new investment in our energy infrastructure, a figure estimated by Ernst and Young and supported by Ofgem and others. By 2018, 16 power stations generating more than 18 GW of capacity will close, representing about one quarter of British electricity. We will lose a third of our coal plant by 2016 as a result of the large combustion plant directive, and much of the rest as a result of the industrial emissions directive. Our remaining oil capacity will be extracted at the same time, and most of our nuclear programme, apart from Sizewell B, is due to close by the early 2020s. Global oil demand could rise by a quarter in the next 20 years, and global gas demand could increase by 40% by 2030. Some £5 trillion in investment is needed to meet those future demands.

In addition to that challenge, we face climate change. We must build a different kind of economy that cuts our carbon emissions in order to tackle climate change, and that makes our energy secure in a way that can endure volatility.

[Mr Iain Wright (Hartlepool) (Lab)]

The Minister said that the Government have made the green economy and energy security priorities, which I welcome. I suspect, though, that they tend to focus more on climate change and the green economy than on energy security. May I press him on the remarks made in the coalition programme about energy security, particularly the three bullet points?

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[Mr Wright]

I appreciate your ruling, Miss Begg. Will the Minister concentrate on the energy security elements of the coalition programme? How will he reform energy markets to achieve those aims?

[Charles Hendry]

I am grateful to the hon. Gentleman. We will have to wait with bated breath for the three bullet points to which he was going to refer. I look forward to hearing them in due course.

Energy security is at the heart of the matter. We must rebuild this country’s energy infrastructure, and a whole raft of technologies exist that we want to bring into play. Part of the problem we face is that, considering the extent to which plant is being decommissioned, more concrete should be being poured and more bricks and mortar put in place now. A lot of work has received consent, but much of it is still on hold pending building. Greater urgency is required to secure construction.

Turning to the specific technologies, we believe that nuclear should be part of the mix as long as it can be built without subsidy; we broadly agree with the former Labour Government in that respect. According to the coalition agreement, if it can be built without subsidy, it will be part of the mix. We are clear that that means the private sector should be responsible for the building, running, decommissioning and long-term waste disposal costs of any new nuclear power stations. The Government must be involved in the effort to remove barriers to investment—the work of the Office for Nuclear Development has been important in that respect—and ensure that the appropriate safety, security and environmental regulations are in place. We see nuclear as part of the mix, but realistically, even if everything goes according to the most optimistic plans, it will be 2017 or 2018 before new plant can be constructed.

Coal has an important part to play as well. We have an abundance of coal; this country has hundreds of years’ supply of coal left. We should be leading the world in coal using carbon capture. We are determined to move from our current position—we are not as far ahead as we should be—and take that global opportunity. In addition to our coal reserves, we need to rebuild our coal-fired power stations. We have unique sequestration facilities at sea where CO₂ can be stored, and people with the right skills to carry out that work are working in extremely hazardous conditions in the North sea. We are absolutely committed to taking work forward in that area.

Today we launched a market sounding exercise to encourage the industry to present schemes for consideration for subsequent projects. One pilot project is under discussion, and three others might be considered. We want industry to help us frame the competition in the way that suits it best in order to bring technologies together, share skills and understanding and make it happen.

We also announced today that we are setting up a carbon capture and storage development forum to focus specifically on removing the obstacles to investment in CCS. It will consider the nuts and bolts, just as the nuclear development forum does. We will also make headway on a road map so that people can hold us to account on our ambition. Ambition is important, but without a road map, targets have little benefit or meaning.

We want renewables to be part of the mix too. That is one of the most uncomfortable issues for us in the United Kingdom. Of the 27 members of the European Union, we are second worst regarding the extent to which renewables contribute to our electricity generation. Yet we have resources. We have some of the strongest winds in Europe, the highest tidal flows and some of the strongest potential for wave technology. We have let the rest of Europe move ahead of us in deployment, skills and, critically, the supply chain. We must ensure that we begin to take a lead on renewables. We will need more onshore and offshore wind power, a massive increase in energy from waste and faster development of marine energy such as wave and tidal. We wish to drive all those technologies further forward.

Undoubtedly, the renewables obligation has encouraged significant investment in onshore wind, but that has not been without problems in the communities where it operates. In order to drive further development, we want a different relationship, considering what aspects of council tax and business rates can be kept local to communities and how communities that host facilities of wider regional or national significance can share in the benefits that they bring. That way, we hope to give wind farms greater public legitimacy than has sometimes been the case when investment has been sought in such important systems.

We are now the world leaders in offshore wind power, with 14 operational offshore wind farms generating more than 1 GW of electricity, and a further 1.5 GW worth of construction under way. However, we also need to consider what more can be done to drive work further forward. The round 3 applications are substantial, with billions of pounds of potential investment needed. We know that we have a shortage of skills, ships, cranes and technology. Again, therefore, we must focus on how to provide solutions if companies headquartered overseas seek to invest in Britain. That is one of the challenges we face. In the current market, we are seeking to attract investment not just from British companies, which might be predisposed to invest here, but from companies around the world. That will be a key objective for this new Administration.

Although wind and biomass, as large technologies, will be central to meeting our 2020 targets, we need to see the targets in perspective. Too often, there is a tendency to see them as a finishing post—a line over which we will fall, struggling and gasping, having got there by 2020. In reality, we should see them as a staging post and as part of the process towards even more ambitious and challenging objectives further down the line. If we start to see them in that way, it gives us the ability to drive forward investment in new technologies, such as the marine and tidal sectors. On Friday, I had a meeting in Bristol with some of the key players involved with that technology, who are keen to invest and move Britain forward. However, we do not yet have the structures in place to make that happen.

We are considering how we can make marine energy parks work. A system could be put in place whereby there is not just a grid connection point but, critically, onshore facilities and people with the relevant engineering, academic and business skills. We hope to attract people from around the world to invest in Britain to develop those marine and tidal technologies, so that Britain will be the natural place for them to be deployed. We undoubtedly have the natural resources here to make that happen. However, rather worryingly, some of the key players are looking elsewhere for the best financial support mechanisms—for example, Portugal or the United States. We have to make it absolutely clear to the key players that we are determined to drive this forward in the United Kingdom.

In addition to putting a new generating capacity in place, we face the challenge of rebuilding the grid infrastructure—not just the existing grid, which is rather old, but connecting up the new facilities. Last year, the Electricity Networks Strategy Group published its report, setting out the onshore transmission investments needed to meet the challenges in our generating mix between now and 2020. That group estimates that about £4.7 billion of new investment in the grid is required over the next decade. We will shortly publish our decisions on the best systems for driving forward that absolutely fundamental investment.

We have nuclear, clean coal and renewables in the mix but, realistically, they will not produce huge amounts of electrical energy before the latter part of this decade. We are facing a crisis and a challenge here and now. In the shorter term, we recognise that there will be increased reliance on gas. Although imports are not themselves a problem, our growing dependence on them means that we need to increase the security of our gas supplies.

The Government will set out measures to improve our gas security, as promised in the coalition document. We need more gas storage capacity, more gas import capacity and greater assurances that our market will deliver gas when it is needed. Our gas market arrangements must therefore have a sharper focus on increased flexibility and resilience. We will work internationally to try to address some of those issues and to deal with the physical constraints in the system. The disputes between Russia and Ukraine in the past, and between Russia and Belarus more recently, show that new routes to market for gas must be found. Additional pipeline infrastructures to the north and south of Europe would remove some of those blockages but, again, they will take some time to put in place.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am happy to be corrected if I am wrong but, in Britain, dependence on Russian gas is nothing like as large as it is in any other European country. In fact, is it not right that we have been getting gas from many other European countries over the past few years?

[Charles Hendry]

The hon. Lady is absolutely right in her assessment. We get virtually no gas—1% or 2%—from Russia. However, during the Russia-Ukraine dispute last year, when there was a huge problem in central Europe, gas was being pumped out of the United Kingdom just as we were coming out of our coldest winter for 18 years, which put our gas storage supplies under pressure. We must recognise that we live in an interdependent world in terms of energy security and we have to put measures in place to ensure that we are protected against those sorts of international issues, which pose unpredictable, international challenges to the resilience of our system. In three of the past four winters, we have come under pressure. Fortunately, we have been on the right side of such problems in the end, but we must recognise that it will not necessarily be a UK challenge that will put us under pressure; there could be pressures from many hundreds of miles away.

[Mr Iain Wright]

Will the Minister tell hon. Members how many days of gas capacity we have? I heard that we have eight days at the moment, which does not seem a lot. In the middle of summer, I can understand how that figure is workable, but it would cause a real problem in the height of a very cold, severe winter. What steps is the Minister taking to ensure that we increase gas storage capacity?

[Charles Hendry]

I think the hon. Gentleman has been reading my speeches from before the election. In two months, we have not completely transformed the availability of gas security and storage in this country. However, we recognise that we have at best about 16 days’ capacity, which compares with about 100 days in Germany and a bit more than that in France. We need to secure more capacity, but we also need to recognise the totality of the picture. The Langeled pipeline from Norway is one of our most important channels, and there are liquefied natural gas facilities in the Thames and in south Wales. Those are areas where we can bring gas into the United Kingdom. That is part of the overall gas security picture. We need more gas storage, but we also need to be absolutely clear—this is what the coalition agreement states—that the people who are supplying gas are certain that they have access to adequate supplies. That could relate to storage, to long-term contracts through pipelines or to more interruptible contracts.

[Emily Thornberry]

I have heard many of the hon. Gentleman’s speeches about the importance of increasing our gas supply. Given the Conservative preoccupation with the number of days of gas supply we have in storage, perhaps he can tell us, now he is in government, how many days supply he would be comfortable with us having in the winter.

[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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[Charles Hendry]

The threat to the resilience of our system was exactly as we set it out. In three of the past four winters, issues that could not have been predicted put us under pressure. In the winter just past, the Langeled pipeline froze up, which meant it was not working at anything like full capacity. The year before, the Russia-Ukraine dispute took place, and a couple of years before that there was a fire in our largest storage facility—the Rough storage facility. All those factors brought pressures that could not have been anticipated.

There is a significant difference between us and the previous Administration regarding the role of gas. We expect gas to be of growing importance in the short to medium term, whereas the previous Government believed it would be declining. If one considers where the investment is going, 60% of the new generating capacity—12 out of 20 GW of consented plant—will be gas. That means we will move much more rapidly to a system of significant dependence on imports. We are not talking about the figure of well under half that the previous Government mentioned, but potentially 70% or 80% by 2020.

It is our responsibility to face that challenge and ensure that we put the measures in place that will enhance security of supply. Gas storage and long-term contracts are part of that mix; additional sources of supply—perhaps new LNG facilities—are another. We need to be certain that people who depend on gas as part of the generating mix or who depend on supplying it to domestic customers have secured the way in which they will obtain the fuel as and when they need it.

The comments of the hon. Member for Southampton, Test (Dr Whitehead) bring me to another crucial point. In the foreseeable years ahead, there will still be a significant contribution from the North sea to our energy security. We believe that it is clearly in the nation’s interest that we develop those resources to get the best from them that we possible can, as that will enhance our energy security. We should be keen to develop those resources further.

I find the continued and significant international interest in investing in the North sea encouraging. The 26th offshore oil round, which is now in progress, has produced applications for 356 blocks, the largest number of applications since the first round in 1964. We will continue to encourage industry to invest in developing those facilities in the North sea while, at the same time, maintaining high standards of management and minimising environmental impacts. We recognise that those companies are international and have a choice in where they go. If we do not create a stable and attractive regime, they will undoubtedly go elsewhere.

Clearly, the Deepwater Horizon tragedy in the United States has been in our minds, and we must consider the implications for the UK as we continue to develop in the North sea, particularly in the deeper waters west of Shetland. We must continue to increase our vigilance. We have the most robust regime in the world for environmental protection and safety protection for the rigs involved in drilling operations in the North sea. All installations must have an approved plan to deal with any spills and we have doubled the number of inspections carried out by the Department and increased by half the number of inspectors. We believe that we have responded effectively to the challenges. Unlike the United States, we have always had a clear division between the licensing operations, which are carried out by the Department of Energy and Climate Change, and the health and safety regime, which is the responsibility of the Health and Safety Executive. That separation of responsibilities has been important in securing the safety and environmental standards that operate in the North sea.

We will, of course, learn from any further lessons that emerge from the investigations on the tragedy in the gulf of Mexico, three of which are now under way. I offer Members an absolute assurance that we will take no risks where environmental safety is concerned. Partly in response to that disaster, and with the industry, the new Oil Spill Prevention and Response Advisory Group has been set up to investigate whether any additional measures should be taken.

I have so far focused my remarks on the need to generate new capacity and secure supplies, but there are several other matters that it is right to refer to in the debate, and the first is energy efficiency—we should never talk about energy security without talking about energy efficiency. Energy efficiency is the low-hanging fruit—the area in which we can make the most significant savings. We must recognise that the money that does not need to be spent on wasted energy is one of the most efficient investments we can make. The UK probably has the least energy-efficient homes in Europe, which is a serious concern. That is an accident of geography; were we further north, we would have had to develop much greater energy efficiency, as Scandinavian countries have done, and were we further south, that would not have been so necessary in the winters.

Therefore, we have a massive amount of catching up to do, which is why we will be legislating this Session by introducing an energy bill as part of the green deal, enabling energy efficiency measures to be rolled out across the nation’s housing stock. We discussed how those measures might work at length while the Energy Act 2010 was going through Parliament. The critical point is that the savings should be greater than the costs. The savings would start to be made immediately after the measures are put in place, and the costs will be claimed back over a period of 20 to 25 years through a small increase in the bills for the people whose properties have been improved. We think that that will start to bring our stock—houses, businesses and public buildings—up to the necessary standard. We should be in no doubt that that is a national emergency. We have lagged too far behind for too long and there is now a real determination to put it right.

A related point concerns the roll-out of smart meters, which are crucial to enabling people to choose the tariff that is the most reasonable for them. They are crucial to encouraging people to go down the route of micro-generation and start generating electricity in their homes and properties. They are also crucial in dealing with fuel poverty. In Northern Ireland, for example, people on prepayment meters pay less than the normal tariff. Smart meters have many benefits, so we have put in place the work to bring forward their roll-out by several years. We were always convinced that 2020 was not ambitious enough and are determined to achieve the overwhelming majority of the roll-out long before that date.

I will now address the points made by the hon. Member for Hartlepool (Mr Wright) on the fundamental market reform measures. We recognise that the measures that we are trying to take to encourage investment will not be sufficient on their own; other elements of market reform will be necessary to help drive forward new investment in the sector. As part of that process, we should have a meaningful carbon price so that people know what the price will be for every tonne of carbon emitted. That will be set on a clear trajectory and will be a clear indicator for those investing in low-carbon technologies. It will benefit all low-carbon technologies.

We are also exploring how capacity payments would work, because we recognise that, as we move into an era of inevitably more fluctuating generation supplies, both from onshore and offshore wind power, there is a need for back-up capacity that can work part of the time, but not 24/7. We must find the right way of setting in place a capacity market to encourage people to invest in that technology and find new ways of taking demand out of the system by smoothing the peaks and troughs of demand. We need to look at both increasing supply and managing demand more effectively. We believe that those electricity market reform measures can help to create a much more robust system in the UK, which will help to secure investment.

This debate is important because it gives us an opportunity to discuss many of the issues at the heart of our energy security. We need an unparalleled amount of new investment in capacity if we are to achieve the energy security that we believe is essential. About £200 billion of new investment has to be secured. We believe that clean coal with carbon capture will be part of that mix, as will nuclear energy, so long as it is without subsidy. The full range of renewables will also be part of the mix, and there will be an enhanced role for gas, but it must be accompanied by extra measures to enhance our gas security. Lip service has been paid to those matters for far too long, so we are determined to act to put in place the necessary energy security. It is only by having energy security that we can genuinely move towards a low-carbon society and keep prices affordable for consumers.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

It is a pleasure to serve under your chairmanship, Miss Begg. To keep the lights on, the country needs both adequate levels of storage and security of supply, and that cannot be left to the vagaries of the market. The new Government have to give a strong and clear lead. Our concern is that, although they begin from a good place, they are showing early signs of not understanding the enormity of the task and not necessarily being up to it.

In the last few months of the Labour Government, the Conservatives stepped up their criticism of what the Government had been doing to ensure security of supply—the Minister will know this because he was there—including, rather bizarrely, an Opposition day motion on 13 January, just one week after the coldest winter for 30 years. That motion called on the Government to take immediate action to ensure diversity in electricity generating capacity and adequate levels of natural gas storage. That, of course, was exactly what we had done. Labour had ensured diversity in electricity generating capacity. In the past decade the UK has opened up new sources of gas in Norway, the Netherlands, Algeria, Australia, Qatar, Egypt and Trinidad and Tobago. Our country’s gas supplies are not drawn from the likeliest of sources, as has been said. Our gas does not come from Russia and the middle east to the same extent that it does for most countries. We certainly do not need gas from those regions to fulfil two thirds of our needs, as does the rest of the world.

During last year’s winter, when demands on gas supplies were unprecedented, the lights stayed on and homes were kept warm because we had made rapid progress, with almost a third of all supplies coming from sources that did not exist five years ago: the Langeled pipeline from Norway, to which the Minister has already referred; the BBL pipeline from the Netherlands; and the South Hook and Dragon terminals at Milford Haven, which receive liquefied natural gas from Qatar and were opened by my right hon. Friend the Member for Doncaster North (Edward Miliband). So, things had changed, and diversification was happening. We got through this very cold winter—the lights did not go out.

The Tories’ second charge was that we did not have an adequate level of natural gas storage, and that is why I asked questions of the Minister earlier. While the Tories were in opposition they made a great deal of noise about the inadequate levels of gas storage, but perhaps now they are in government there has been a change of heart. As has already been said, the UK has far more of its own gas resources than other countries, and as my hon. Friend the Member for Southampton, Test (Dr Whitehead) has pointed out—and as we all know—we have a great deal of gas storage available to us because, luckily, we have gas in the North sea. Parallels made with countries such as Germany are simply wrong, misleading comparisons. I am glad to see that, now the Minister is in government, he will not be doing that again.

The figures for natural gas supply imported by European countries are: France 96.5%, Germany 80%, Italy 87%, Spain 99% and the Czech Republic 93.7%. The figure for the UK is only 20.3%. Our level of dependence on natural gas imports is far lower than that of comparable countries. Of the 27 EU countries, we are the second least import-dependent. In National Grid’s most recent review of gas supply, “Transporting Britain’s Energy”, which the Minister might have been able to read, it stated that potential supply from UK power stations is 28% above demand, and it forecast that that excess would continue through to 2016 and beyond. Labour expanded our gas import capacity by 500% during the past decade. During last year’s winter, Steve Holliday, chief executive of National Grid, claimed that,

“we’ve seen the benefits of the investment of the last five years where the UK can now import 30 per cent. of its gas internationally that it couldn’t five years ago”.

DECC’s last assessment under Labour of gas supply resilience showed that we could withstand a large number of problems. We could withstand the loss of the UK’s largest gas storage facility, including in a severe winter, and the lights would stay on. We could withstand the loss of the UK’s largest gas import terminal in a severe winter, and the lights would stay on. We could withstand the loss of the UK’s largest source of imports for a whole year, including in a severe winter, and the lights would stay on. In fact, we could withstand a combination of any two of those losses for a year. When the Conservatives were in opposition their criticism of our lack of resilience simply did not meet the facts. For example, we could lose gas supplied by Russia through Ukraine and also lose the Bacton terminal, but still avoid blackouts in a cold winter.

During the 2009-10 winter, when cold weather placed unprecedented demand on supplies and four of our Norwegian fields stopped supplying gas, the lights nevertheless stayed on and homes remained warm. The right hon. Member for Tunbridge Wells (Greg Clark), the Minister’s previous boss, made great play of the fact that the UK had just eight days’ gas storage remaining. The Minister might remember the Conservatives being somewhat alarmist about that. That figure ignored the amount of gas being imported and the fact that half of UK demand is met by the North sea production. At the time, the hon. Member for Bermondsey and Old Southwark (Simon Hughes), who is now a member of a party supporting the coalition, sought an apology from the right hon. Member for Tunbridge Wells and called his claims

“unnecessary, alarmist, inaccurate and misleading”.—[Official Report, 13 January 2010; Vol. 503, c. 756.]

That could not have been better put.

National Grid stated that the eight days of gas storage remaining was a meaningless number, and now that the Conservative party is in power it seems to have changed its tune. Lord Marland, the Under-Secretary of State, had talked about the eight days’ supply but said in a debate in the House of Lords on 29 June:

“we feel confident that we can sustain the supply required.”—[Official Report, House of Lords, 29 June 2010; Vol. 719, c. 1659.]

Does the Minister agree with Lord Marland? If he does, will he take this opportunity to apologise on behalf of the Conservative party for being unnecessarily alarmist, given all the circumstances?

As the Minister said, it is of course not just a matter of what we will do in the short term; we also need a long-term policy. In those circumstances, therefore, the importance of renewables cannot be overstated. We have a very challenging target for the amount of energy demand that we want to fulfil through renewables, and Labour made a good start. Renewable energy has doubled in the past five years and, as the Minister has been kind enough to point out, we introduced the renewables obligation in 2002, which has enabled a huge expansion of onshore wind and made us one of the biggest producers of offshore wind in the world. I welcome the Secretary of State’s decision to confirm the £5 million grant offered by the previous Government to Siemens Wind Power. However, without a robust planning system we will not get enough wind turbines here:

“One of the reasons Britain’s green industrial revolution is yet to take off is the lack of domestic demand for wind turbines, and a key reason for that has been the attitude of many Conservative councils”.

The Minister might recognise that as a quote from John Sauven of Greenpeace, from The Guardian on 27 July 2009.

How, therefore, will the Government meet increased renewables targets, while across the country Conservative MPs and councillors campaign to block onshore wind farms? Some of the sketchy outline the Minister gave us on how he will encourage onshore wind was interesting, but we have yet to see any detail, and that is what will be important. We do not quite understand how it is that local communities will get some benefit from onshore wind projects being built near them. Will it simply be onshore wind? What if, for example, gas storage capacity is built near a village? Would it get some sort of benefit from that? Who will pay for it? Will it be paid for out of the public or the private purse, and how much money are we talking about? It is a very interesting idea in theory, but we need to understand what it means in practice. While it remains sketchy it gives no certainty to the industry, and the industry needs certainty. The public also need certainty, and we need to get a move on with renewables. I agree with the Minister that we need more onshore, but we cannot go on as we are at the moment.

The feed-in tariffs encouraged small-scale renewables, and I am glad that the Government will promote that policy. A revolution is under way in electricity production, but we need one for heat. I therefore again ask the Minister if he will guarantee the introduction of the renewable heat incentive. We have yet to hear clear proposals from the Government, and the industry is holding its breath while waiting for an understanding of where we are going.

I have to say that many of the Government’s proposals, such as the green investment bank and smart meters, look familiar, as does their dependence on what I think my right hon. Friend the Member for Doncaster North called the “triumvirate” of nuclear carbon capture and storage for coal and renewables. We await the implementation of those proposals with care, however.

The Minister has for a long time been a supporter of nuclear power, but the Government are unable to give clear leadership on the issue because they do not have a position—they have a large number of positions. They are notionally in favour of nuclear power, but the Lib Dem representative will speak against it, the Lib Dem party will refuse to vote on it, and I have yet to get my head around what the Secretary of State’s position is. Frankly, the industry needs to know and to have clear leadership.

[Charles Hendry]

The heads of all the nuclear companies have said that they are entirely comfortable with our position and understand it precisely. Will the hon. Lady not accept their assurance that our position is rational, sensible and realistic, rather than creating scares that do not exist?

[Emily Thornberry]

As Christine Keeler said, “They would say that, wouldn’t they?” The point is that the nuclear industry needs to know what the Government are doing. The industry will not pick a fight with the Government at such a crucial stage, but it needs to know where they are going. The Government have a number of positions, and it is not easy for the industry in those circumstances. Of course, the industry will not come out publicly and criticise the Government—that is our job in opposition. However, we are confident that it does not help the nuclear industry for the Government to hold four positions at the same time on the future of nuclear power.

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[Charles Hendry]

There is one position, which is that nuclear will be part of the mix if it can be built without subsidy, and that is it—one position, complete clarity.

[Emily Thornberry]

That sounds simple and understandable, but we then need to look at how these things are implemented. For example, is the cancelled loan to Sheffield Forgemasters the first casualty of the uncertainty over Government policy on nuclear? There are a number of questions relating to that. Did the Lib Dems’ prejudice against nuclear power have a role in the decision to cancel the loan? Was the decision made because of the coalition’s policy of having no public subsidy for nuclear? Did that impact on Sheffield Forgemasters or not? Was it right for the Government to give Nissan a grant to make electric cars—a proposal that we support—but not to provide a commercial loan to help a British company be at the centre of an indigenous nuclear supply chain? How do these things fit in?

What we see are the Government’s confusion and the refusal to grant a commercial loan to a company worth £40 million. The loan would need to be £80 million, and it would be difficult to get that money from a bank. The refusal to grant the loan means that Sheffield Forgemasters is unable to build the sort of kit we need to build nuclear power stations in Britain. We are not necessarily talking about a subsidy from the public purse. We need a Government who are prepared to look to the future and to decide that the triumvirate includes nuclear, that we are serious about these issues and that we will give such assistance as is necessary. The current situation is very unfortunate, and we have a number of questions as a result.

That is one casualty, but there is another. Will the Minister confirm whether there will be cuts to the Nuclear Decommissioning Authority? If there are to be cuts, when will they be and what will they be? More importantly, will they have an impact on the future of Britain’s nuclear power industry? The issue of the public purse paying for cleaning up after nuclear has always been part of the arguments about whether nuclear power is being subsidised, so what will happen? Are we talking about a subsidy or not? Where does that fit with the coalition agreement on nuclear power? We need to know, and the industry definitely needs to know. Publicly, the industry might not be critical, but the Opposition are being critical because a confused picture is being put out.

The expansion of Sheffield Forgemasters represented an opportunity for Britain to make key components for the nuclear industry, which will now have to be sourced from places such as Japan and Taiwan. That is very unfortunate for green jobs and the economy. The Government have tried to defend their position by suggesting that Sheffield Forgemasters should obtain funds from the financial markets. Once again, we see actions motivated by free market ideas that are completely misplaced.

Before the Conservatives made their deal with the Lib Dems, they were highly exercised by the gap between the end of the life of the current fleet of nuclear power stations and the earliest date by which we might get some new nuclear power stations. Why are the Conservatives now so relaxed about that? There seems to have been a change. The Government should be taking up the long-term challenge of decarbonising the economy and the job market, rather than just embracing short-termism, but some of the decisions that have been made are simply short-termist.

The Government share our view that the nuclear industry should not receive a direct subsidy from the public purse, but the industry needs clarity and reassurances, not obstacles. In the words of Richard Nourse, managing partner of renewable energy fund novusmodus,

“Nuclear is a long journey and developers need confidence to keep travelling.”

Can the Minister provide that confidence? What percentage of our electricity does he expect nuclear to contribute in the next 10 years? Without that confidence, we will surely see delays, which will increase our dependence on gas.

The Labour Government made a huge commitment to investment in carbon capture and storage technology for four coal-fired power stations. Through that technology, we intended drastically to decarbonise our energy supply. Can the Minister perhaps give us a little more detail on whether he intends to go ahead with the four coal demonstration projects? Can he give me some information on the Government’s thinking about the locations of those projects and the bidders? Will he confirm that the coalition plan is that CCS will be deployed more widely in 2020, and that any new coal plant constructed after that will be fully fitted with CCS? One hears rumours that the Government are thinking again about whether there will be four coal-fired CCS plants or whether one will be gas. Is there any truth in those rumours? Before the election, the Minister was much exercised by emissions performance standards for CCS. Will he tell us when or whether he is introducing proposals for such standards?

In every debate and every piece of thinking on security of supply, we must not overlook the role of energy efficiency, as the Minister said. I have 14 questions outstanding from our previous debate on energy efficiency, and I certainly hope we will get an answer to them soon; indeed, we might be tabling written questions to get answers to some of them. More importantly, however, there will need to be some huge building projects, involving gas storage facilities, onshore wind or nuclear plant, if we are to move to a low-carbon economy. We will be relying on the markets to do the heavy lifting, but at the very same moment, coalition policies have caused great uncertainty about planning.

Hon. Members should not just take my word for that. On 2 July, the director of policy at the British Chambers of Commerce said that the coalition’s abolition of the Infrastructure Planning Commission

“puts politics back into the planning system at a time when an overwhelming majority of businesses say that they want key infrastructure schemes decided by experts, not politicians”.

There is great concern about that, and it does not come just from the Opposition and the British Chambers of Commerce. Concern is also voiced on page 53 of the second progress report to Parliament from the Committee on Climate Change, which says that key actions for the future include

“Ensuring that the proposed replacement of the Infrastructure Planning Commission does not prevent projects—renewables, or low-carbon infrastructure more generally—progressing in a timely manner through the planning process.”

There is therefore great concern about the fact that politics is being put back into planning, and that planning will be held up at a time when we need to show direction and leadership.

This is a crucial time, when we need to be able to move to a low-carbon economy. We need a Government who are confident and who do the right thing. As I said at the outset, the current Government have the advantage of coming from a good place, because the Labour Government laid the ground well. However, it is of great concern that Ministers are now floundering around, particularly on planning and nuclear. Perhaps the biggest concern, however, is the statement in the coalition agreement that the parties concerned

“share a conviction that the days of big government are over”.

In the Minister’s Department, big government and leadership are necessary. Without them, we will not move to the low-carbon economy that we need.

--- Later in debate ---

[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.

[Emily Thornberry]

The problem with the changes to the planning system is not just who will make the national policy statements and how they will be decided, but how they will be implemented and the fact that a Minister will be implementing the decisions. That is the reason why many people and organisations are concerned that there will be delay. That is a vital issue in respect of the development of our infrastructure.

[Charles Hendry]

Let me seek to reassure the hon. Lady. The discussions that we have had with industry have reassured it about the changes that we are making. Our concern about the Infrastructure Planning Commission was that it had no democratic accountability. Decisions on nationally significant issues were being made with no prospect of contributions from Members of Parliament and without the opportunity for parliamentary scrutiny. We believed that that was not just democratically wrong, but enhanced the risk of judicial review, so the change that we have made is that the back-office function—the work of analysing the individual planning applications—will go ahead as originally planned but within the planning inspectorate, and the recommendation will then be made to the Secretary of State, who will have three months to make a decision. That is exactly the same time scale as would have been the case under the IPC, but there will be less chance of judicial review and there will be greater parliamentary accountability. Also, transitional arrangements will be in place so that whichever system an application starts under, it will complete under it. There will be no risk, when the system changes, of an application that was two thirds of the way through having to start again. Whichever jurisdiction it starts under, it will continue under.

The process provides the speed that is necessary and that industry is keen to have. It provides greater scrutiny, greater acceptability and less risk of judicial review, which might delay the whole process by six or 12 months. Those are the reasons why we have made the changes, but we have been extremely conscious throughout of the need to maintain investor confidence, and the work that we have carried out with the investors reassures us that we have got the balance right.

[Emily Thornberry]

I am very interested to hear what the hon. Gentleman is saying, and it is clarifying a number of issues, but there is the additional residual problem. He talks about the national policy statements being agreed on the Floor of the House and party politics therefore being taken out of it. Nevertheless, if an individual Minister will in the end make the decision, surely party politics comes straight back in again.

[Charles Hendry]

The hon. Lady is absolutely wrong. The Minister is acting in a quasi-judicial capacity. He is acting not as a party politician, but as someone who has a legal responsibility. A recommendation will be put to him through the planning inspectorate as to whether to accept or decline an application. He will not be able to say, “That’s a little bit close to a Conservative seat”—or a Labour seat—“so I won’t give it the go-ahead.” He must decide on the basis of the argument put to him and must explain why he has either accepted or declined the application. The process is intended to maintain political impartiality.

I can tell the hon. Lady that I do not believe that in any decision I am making, there is a political imperative about where a national grid connection, a nuclear power plant or a new gas-fired plant goes. My job is to look after the national interest and to ensure that applications are made in line with planning law. To me, this is not a party political issue, as I hope the hon. Lady will accept. We are deciding on projects of national significance and trying to get the right outcome as far as the country is concerned.

[Emily Thornberry]

The hon. Gentleman talks about political impartiality and a quasi-judicial function, but surely a Minister has choice. If a Minister is to act in a judicial fashion, he or she simply has to step out of the arena and make a quasi-judicial decision. I do not understand, if someone is to make a decision in some sort of judicial capacity, how that is democratically accountable. Either they are allowed to use their political brain and make a decision, which is then democratically accountable, or they use a judicial one, which steps outside the arena and outside politics.

[Charles Hendry]

The fundamental difference is that a Minister sits in Parliament. A Minister can be questioned by Members of Parliament. They can be called before Select Committees much more readily. There can be debates in Westminster Hall or Adjournment debates in the main Chamber. There is a range of areas where the Minister can be subject to scrutiny on the decision made. It is a quasi-judicial role, but we believe that it provides a degree of democratic accountability that is simply missing within the IPC. We may simply have to disagree. We believe that the process maintains the speed and the important elements of the IPC—changes that the previous Government put in place—but it rectifies the democratic deficit.

The hon. Lady raised additional matters relating to the nuclear sector. She asked about the work of the Nuclear Decommissioning Authority. We take very seriously the legacy issues, but we separate out the legacy responsibilities from new build. There is no doubt that clearing up the old legacy issues, which are a combination of civil and military nuclear issues, is something for which the nation, the taxpayer, the Government have to be responsible. The previous Government addressed putting that right with a degree of seriousness that had been missing historically, for which I give them credit, but much is guided by independent legal assessment. The Government are not at liberty to decide which bits they want to do themselves. They are required by law to carry out certain actions now in respect of the clear-up, and that work is central to the work of the Department.

The hon. Lady will be aware that the NDA’s budget is about half the entire departmental budget, so if there are areas that are not absolutely necessary and there are areas where we can gain additional resources and revenue, we will, rightly, consider those as well, but I ask her to be in no doubt whatever about the moral imperative that we attach to addressing the legacy issues.

The hon. Lady also asked about Sheffield Forgemasters. I repeat the assurance given by the Secretary of State in the Chamber last week during oral questions. He said that it was purely about costs, and that the nation could not afford many of the projects that had been approved—it was on those grounds rather than because it was related to the nuclear industry. He also highlighted the fact that had the directors involved been willing to dilute their shareholding it would have been easier to get a commercial loan. Is it the Government’s job to put public money into a private company to enable directors to maintain their shareholdings if commercial arrangements could have enabled them to secure that loan elsewhere? The directors now say that they will seek to carry this forward through other mechanisms, seeking loans and support elsewhere. We believe that that is right. At the end of the day, however, it is not about nuclear; it is money that the Government simply do not have. We have run out of money, as the former Chief Secretary told us.

[Emily Thornberry]

The problem with the Minister’s explanation is that he was talking of a commercial loan. Given that the company is worth £40 million and the loan was for £80 million, it was not a question of selling shares to raise money; the company was not worth the amount of the loan. That is the problem. That is why we need a forward-thinking Government, that has ambition but which understands the importance of moving to a low-carbon economy. The Secretary of State for Business, Innovation and Skills often criticised the banks for not being forward-looking enough when he was in opposition; now, in government, it would seem that he is falling into exactly the same trap with the banks that he used so readily to criticise.

--- Later in debate ---

[Charles Hendry]

We are considering a whole range of things to which the previous Government were committed. Many were laudable, worthwhile projects, but we have to accept that we have run out of money. That was the fundamental problem. There was nothing about the nuclear industry, the locus of her original charge; we had to consider major areas of expenditure, and commitments that had been made that could not be funded. It is a good company and a good project, and we want it to happen, but we have to decide whether public money should be contributed, given that we are trying to reduce some of the pressures and burdens on taxpayers. I assure the hon. Lady that the decision was based on the fact that the money was not available; it was no reflection on the company’s workmanship, which is outstanding, or the nature of the project itself.

The hon. Member for Hartlepool spoke about the north-east and the contribution that it can make, as he has done before. I asked whether I could visit the area rather than him inviting me, but my offer to visit is still there. I shall have to be slightly careful about those nuclear plants that are going through the planning process, as I may subsequently be involved in some of those decisions. However, I am particularly keen to see some of the supply chain opportunities and the industries that ride on the back of them. I recognise the fantastic opportunities and potential of the north-east, and of those elsewhere.

What is exciting at the moment is that many parts of the country are looking at their energy potential. Cumbria is calling itself the energy coast, and Anglesey calling itself the energy island. Many see it as a key point in selling their areas to potential investors. The skills base of the north-east and the extraordinary depth of experience in the engineering and technical sectors must be an incredible attraction to industry. People looking to come to the United Kingdom will undoubtedly consider the north-east to be a priority area. I would very much welcome the opportunity to see some of that potential with the hon. Gentleman.

[Mr Iain Wright]

Before the Minister moves on from the economy of the north-east, will he comment on the prospect of One NorthEast and the regional development agencies in providing such leadership to potential investors on the energy potential of my region?

[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.