Infrastructure Bill [Lords]

Charles Hendry Excerpts

Monday 26th January 2015 Commons Chamber

[Mr Yeo]

We should proceed as fast as possible, consistent with environmental safeguards, which the Government recognise to be essential.

Let me deal with this rather curious idea that allowing fracking somehow increases greenhouse gas emissions. It does nothing of the sort. It is common ground between supporters and opponents of fracking that the UK will use a lot of gas in the next 15 to 20 years. Since 2000, we have become extremely dependent on imported gas. By the mid-2020s, perhaps three quarters of our gas will come from abroad, and we will be competing in the Qatar LNG market, for example, with the likes of China and other Asian giants. So, allowing fracking will enable us to replace imports with domestic supplies, which will improve energy security—a very important aim of energy policy. Further, it will actually reduce greenhouse gas emissions because, as David MacKay reported in September 2013, the net greenhouse gas emissions from LNG are higher than those from shale gas.

[Charles Hendry (Wealden) (Con)]

My hon. Friend is talking about the extent to which we are increasingly dependent on imports. By 2030, probably 75% of our gas will be from imports. Does that not make the case for our doing more now on gas storage, as set out in new clauses 10 and 11? It takes more than five years to build such facilities, and our vulnerability is increasing all the time.

[Mr Yeo]

My hon. Friend is exactly right. I was very tempted to sign his new clauses on that point. Improving gas storage would not only greatly improve our energy security, but make it possible for some of the low-carbon, intermittent generating technologies, such as wind and solar, to be used much more widely.

There is no reason to suppose that decreasing our reliance on imports will lead to an increase in gas consumption. Consumers will not suddenly think, “Oh, as we’re not importing gas, we’ll turn the heating up.” It is a completely mistaken notion to think that allowing fracking has such malign consequences.

In any event, emissions in this country are now subject to the carbon budgeting process. It is greatly to the coalition’s credit that it has confirmed the fourth carbon budget. Achieving that rigorous set of targets will absolutely put us on the path to meet the EU target of a 40% reduction in greenhouse gas emissions by 2030. That will be the case whether or not fracking occurs in this country.

My Committee looked very carefully at the environmental and safety concerns. We are satisfied that with the right robust and rigorous regulatory framework, fracking presents no danger to the integrity of the water supply, the health of local residents or the environment generally. The mistakes made by the fracking industry in the US in its early stages can easily be avoided in this country.

Infrastructure Bill [Lords]

Charles Hendry Excerpts

Monday 8th December 2014 Commons Chamber

[Charles Hendry (Wealden) (Con)]

Thank you, Madam Deputy Speaker. In case the House thinks that you have mis-titled me as you did the hon. Member for Birmingham, Northfield (Richard Burden), I should point out—I thank you for drawing attention to it—my professorship at Edinburgh university, which you and I were very pleased to attend; I should make it clear to the House that you were there some decades after I was. I draw attention to my entry in the Register of Members’ Financial Interests in relation to some of these subjects.

This is a very important Bill. As my right hon. Friend the Minister has said, it has a kaleidoscope of measures. It is positive and encouraging to see so many different measures brought together in one Bill; that shows the Government’s determination to make progress on many different fronts. Bringing the measures together in this way is eminently sensible.

I wish to focus primarily on the energy issues in part 5. I welcome the changes being made to improve the extraction rates in the North sea. We should pay tribute to Sir Ian Wood for his report and the work he did in identifying the real challenges in optimising the returns from the North sea basin. I also welcome the proposals on the extension of community ownership. It has always been my view that renewable energy projects will stand a greater prospect of being approved and endorsed by their communities if there is a significant proportion of local community ownership. We all hope that that will be done in a voluntary way, but the back-stop approach proposed by the Government is very sensible indeed.

The meat of much of this Bill relates to shale gas issues, which I want to focus on. Recognition of the continuing role for gas in our energy mix will be of long-term importance in electricity generation. We need to have a flexible source of generation to make up for the peaks and troughs of renewable sources of generation. That is also vital to heating our homes.

It is clear to me, as president of the National Energy Action fuel poverty charity, that the biggest distinction in fuel poverty is between those whose homes are on the gas grid and those whose are off it. If we do not see greater use of gas in heating our homes, there will be more avoidable winter deaths. The Bill’s proposals recognise the contribution that gas can make in terms of both electricity and heat. There is a focus on security of supply and issues of affordability, and, because new gas will replace dirty old coal, it will also help us reduce our carbon emissions.

Security of supply issues will also be determined by the extent to which the gas will come from our own indigenous resources and the extent to which we will need to import it from elsewhere. If there is a significant source of gas under our ground, we need to quantify and measure it and consider the extent to which it is extractable—the two do not necessarily go together—and whether that can be done in an economical way. The extraction must then take place only if it meets the highest standards of environmental protection and safety.

The Labour party, whose amendment was reported in this morning’s Financial Times, is mistaken in its understanding of the core strength of our regulatory approach. The regulation of our oil and gas reserves—which, along with that of Norway’s, is considered to be the best in the world—is successful not because it is frozen in legislation, which can be changed only by another piece of legislation, but because it evolves and changes as new technology is introduced and new challenges emerge. It evolves because the onus is constantly on the producers—the companies involved—to use the best practices available to them to ensure environmental protection and safety.

That is why the European Commission wanted to replicate the British model elsewhere and why, after what happened in the gulf of Mexico, the Americans considered which elements of the British model they could import into the American system. That process of “best in class” has driven this forward and given us the toughest standards of regulation in the world.

[Andrew Miller]

When the hon. Gentleman was Energy Minister, he and I had some interesting conversations about the oil and gas industry. How can we have a regulatory structure that gives confidence to the public about potential methane leaks if there is no baseline monitoring?

[Charles Hendry]

We can certainly get into some of the specifics, and the hon. Gentleman may well have a good point on baseline monitoring. We need to be able to reassure people on such issues, where public confidence will be essential. The shale revolution in America has been possible because there are huge open spaces—for someone with 2,000 acres of North Dakota, it makes sense to explore the reserves of shale—but in a much more tightly compact country such as the United Kingdom, an entirely different debate is needed to reassure the public.

[Ian Lucas]

Does the hon. Gentleman not accept that the fact that such extraction will take place on land in England, Wales, Scotland and Northern Ireland differentiates it from extraction in the North sea? We must satisfy the public by being much more open about the regulation. Is that not why we need a different approach?

[Charles Hendry]

We need to satisfy the public, but the principle remains the same: the best way to deliver the toughest standards is by putting an unlimited obligation on companies to meet them, and by using the best technology and skills available to do so. That has put us in a position where our system is trusted, and people from across the world look at it to understand how well such a system can work. I hope that in this debate and in the wider debate on shale, we can start to differentiate the legitimate concerns about the transportation of liquids, what is injected and water management from the wholly bogus claims that are often made.

[Barbara Keeley]

I want to make a point about open spaces. We have been through that issue in my constituency; there is a school secure unit a quarter of a mile from the site and residential streets just over half a mile from it. That is not an open space situation. Companies such as the one at Barton Moss can go around and select sites that are grossly unsuitable—right on top of schools and where people live. That should not be allowed.

[Charles Hendry]

I hope that those issues are entirely legitimate to raise within the planning process. Those matters should be looked at in that way to decide whether an activity is or is not appropriate, and I believe that the right processes are in place to ensure that that happens.

As the shadow spokesman, the hon. Member for Birmingham, Northfield, said, the proposed underground access is not exceptional; it already happens for cables, gas pipelines, tunnels and coal mining. As the debate is taken forward, I hope that we can reassure people that we are not doing something draconian or very different, but simply allowing a change that brings the activity into line with others.

I hope that the Bill can still be amended in one area, however, so that it addresses an issue of gas security at the same time. The focus on the North sea and shale gas highlights our vulnerability on energy security. As a country, we are already dependent on imported gas. Historically, the North sea was our gas-storage capability—when we needed more, we pumped out a bit more—which is why we have never stored the same volumes of gas as the French and the Germans. As we move into a period of dependency on gas imports, we need to look again at gas storage.

That is particularly true in the current climate, with the oil price where it is. The risk from the oil price’s being lower than it was just a few months ago is that the North sea will be harder to sustain in the longer term. It is one of the most expensive basins in the world, and there is therefore a risk that some fields will be closed down earlier. They will be abandoned, and it will not be possible to reopen them. At the same time, a low oil price—the gas linkage comes into that—means that UK shale may, because of its cost, be harder or simply not economic to extract. We therefore need to consider how to preserve our security of supply, which means looking again at gas storage.

We should pay tribute to, and recognise, the tremendous difference made by the liquefied natural gas terminals in the Thames and in south Wales, and the important contribution made by pipeline infrastructure from Norway—Langeled, for example—and what it has brought to this debate. However, looking back at gas issues over the past eight years or so, I think that we came too close for comfort during four winters, overwhelmingly because of factors over which we had no control.

The first time was in 2006, when there was a fire in our main gas storage facility at Rough. In 2009, there was the Russia-Ukraine dispute. Even though we were as far away in Europe as we could have been from those issues, gas was coming in through one interconnector and the same volume was going out through the interconnector next door to meet the demand in continental Europe. Eighteen months ago, the winter before last, we came within a few hours of running out of gas because the winter was so long and cold. We cannot leave the situation to chance. We need to take action now to guarantee our energy security for the future.

I believe fundamentally in market principles and approaches, but the market approach has not delivered the level of new investment that we would wish to see in this area. My right hon. Friend the Minister, who introduced the debate, well knows my views on this matter. We had a discussion a day or so after he took over from me as the Minister of State; I said that the one thing on which I wished we had done more was gas storage. I still hold that view today—perhaps even more strongly.

[Mr Hayes]

For the record, I confirm that. I should also let my hon. Friend know that I said precisely the same thing to the person who took over from me.

[Charles Hendry]

My right hon. Friend took the agenda forward on this matter and I hope that he will have a sympathetic ear.

[Andrew Miller]

The hon. Gentleman is being extremely generous in giving way and is making an exceptional speech. Does he agree that the storage issue becomes more vital when one looks at the needs of our heavy energy using industries, some of which use gas as a feedstock? If we are not careful, they will be forced to close down in a bad winter. We have to attack this problem soon.

[Charles Hendry]

The hon. Gentleman is absolutely correct. The head of the British Ceramic Confederation, Laura Cohen, and a group of its members, who employ thousands of people in this country in important industries, wrote to the Prime Minister last year to highlight just that point. They said that there was much greater volatility in prices for industry in the United Kingdom than elsewhere and that that volatility was unacceptably high. They said that the solution was more gas storage and that a public service obligation on gas storage was required.

[Mr Brian Binley (Northampton South) (Con)]

My hon. Friend and I have battled on the same side on this issue for a number of years. In fact, I have been battling on this issue for most of the time I have been in this place. Does he, like me, hope that we will hear something more positive from the Government this evening than we have heard to date? The Labour Government and this Government have prevaricated consistently on the issue of storage. We want to hear something definite about it—tonight, hopefully.

[Charles Hendry]

I seek, on most issues, to be on the same side as my hon. Friend; we do not always manage that, but we often do. The Government introduced a new market mechanism, which we hoped would introduce more gas storage, but it has delivered only a small amount more. There are projects that have essentially been abandoned for the time being because, if they are to be funded on market principles, there has to be a bigger difference between the summer price and the winter price. That does not exist at the moment in a way that would enable those facilities to go ahead.

The Government have rightly looked at market mechanisms, but my conclusion is that we need to look more fundamentally at what is necessary to move this matter on, especially given the time it takes to build such facilities. It will be five years before a big facility can be brought on stream. Some have planning permission and could start very quickly. Billions of pounds of investment are ready to go into them, but a public service obligation on gas storage is needed to make that happen. I hope that the Government are prepared to look at an amendment along those lines in Committee or on Report. I will happily work with them on that.

In conclusion, we are right to explore market options. Normally, in most winters, that will be enough. However, too much of our energy policy in this area in recent years has depended on luck. We have always been on the right side so far, but one day our luck will run out. Taking steps now, with the support of the energy industry and the major companies that use gas, would be a fitting amendment to a Bill on infrastructure. It would help us to go forward with an even more robust infrastructure in the years ahead.

Oral Answers to Questions

Charles Hendry Excerpts

Thursday 28th February 2013 Commons Chamber

[Mr McLoughlin]

This Government are very committed to infrastructure, as demonstrated by our investment plans for electrification and other rail projects. We have committed to doing more in five years than the Labour Government did in 13. We have a very ambitious programme. There are 808 recommendations.

[Charles Hendry (Wealden) (Con)]

As a result of this investment programme, my constituents can now travel from a beautiful new station in Uckfield to the increasingly impressive station at London Bridge. Will my right hon. Friend look again at the availability of diesel rolling stock, so my constituents can have the same comfort on their journeys as they have at the stations?

[Mr McLoughlin]

Of course I am always prepared to listen to representations made by my hon. Friend on matters such as rolling stock. The new station at Uckfield is indeed fantastic, and I am aware that there is a huge amount going on at London Bridge.

Cost of Living

Charles Hendry Excerpts

Wednesday 16th May 2012 Commons Chamber

[Caroline Flint]

As my hon. Friend says, we did not leave a recession, that’s for sure. That is at the door of this Government. When we left Government, we were a world leader in setting targets for reducing emissions and signing up to international agreements—acknowledged by the present Government as an historic effort by a British Government in any situation—and unlike in many other countries, we had a consensus around that, which is good. The problem is that this Government are squandering that legacy with the measures they are taking. We have fallen back in investment in renewables. Families are being abandoned, left on their own to deal with rising energy bills. In addition—I am sorry if the hon. Member for South Thanet (Laura Sandys) did not catch my earlier remark—we do not have an energy Bill that will achieve real reform of the energy market to make it more competitive and fair for British citizens.

Warm Front has collapsed. The Government are not standing up to the energy companies. A lot is resting on the green deal. We want the green deal to work. It is an idea on which the leader of the Labour party worked very hard; it was included in our manifesto and the pilots started under our Government. The truth is, however, that unless Ministers want the green deal to be a good deal, it simply will not work. Time and again, in debates in this Chamber and in Committee, we have proposed improvements, but the Government have refused to listen. Last year, the Government said that the green deal would help 14 million households to improve their energy efficiency, but today their impact assessment forecasts that the programme will reach fewer than 4 million. Even the Government’s own advisers think that is optimistic: the Committee on Climate Change now thinks it will help only 2 million or 3 million households. The Government claimed that the green deal would help to create 100,000 jobs, but today that estimate has been halved to just 60,000—[Hon. Members: “That’s not half.”] I said nearly half. It is still nothing to be proud of.

My next point is very important, because one of the Government’s trails for the green deal was that it would save households money. The so-called golden rule was supposed to guarantee households that the savings they made from greater energy efficiency would cover the costs of the original measures, and just last month the Deputy Prime Minister promised:

“We’ll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”

However, in answer to a written question from me, the Department was forced to admit:

“It is not possible for Government to guarantee people will save money”—[Official Report, 26 April 2012; Vol. 543, c. 983W.]

If Ministers are not careful, they will have a mis-selling scandal on their hands, and it will be entirely of their own making.

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

The right hon. Lady talks about the Leader of the Opposition, when he was Energy Secretary, working very hard on the green deal. Why then, when we proposed an amendment to the green deal in the Labour Government’s last Energy Bill, which became the Energy Act 2010, was it voted down by Labour Members, and why did the then Minister, the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock), say it was simply illegal and impossible to deliver it?

[Caroline Flint]

The hon. Gentleman has been a Member of this House for some time and he knows that the last Government, under the leadership of my right hon. Friend the Member for Doncaster North (Edward Miliband), were absolutely committed to pursuing the green deal. That is why the pilots started under our Government. That is why the measure was in our manifesto. I think the record speaks for itself. The fact that, on one occasion, we did not support an amendment tabled by the Conservatives is proof, and the result was that the green deal was going ahead. The pilots were under way, it was in our manifesto, and had we won the last election—sadly, we did not—it would be in a better state today. The green deal was meant to be up and running by this October, and the secondary legislation should have been laid in March. With just over a week until the House rises, we will not see anything until the middle of June at this rate.

There are question marks over whether the energy companies even have the technology in place to bill people correctly. No green deal assessors have been trained, because the courses have not even started yet. Most importantly of all the public, the people who are meant to be taking up the green deal, have absolutely no idea what the interest rate will be or how much it will cost them.

So desperate are Ministers to prop up the policy that they are now considering whether to force it on people who find that their boiler breaks down. Imagine—a family whose boiler breaks down on Christmas eve could have to wait for the council to come round to do a full audit of the property’s energy efficiency, and then have to agree to take out other measures, before they get their heating and hot water turned back on. That is the type of policy that the Government are proposing, and it just shows how out of touch they are.

The truth is, even when times are tough and money is in short supply there are still things that a Government can do to help families and businesses. I know that the Government are short of ideas. At one of my speeches earlier this year, no fewer than 18 civil servants were on the attendance list, including five from the Department of Energy and Climate Change alone. If the Secretary of State is in the market for good ideas for his energy Bill, here are two that I offer him.

First, let us put all those who are over 75 on the cheapest tariff. We know that the elderly are the most vulnerable to the cold weather, the least able to access the best online deals and the most likely to pay over the odds for their energy. In the Secretary of State’s own constituency, if we put all those over 75 on the cheapest deal it would help nearly 8,000 pensioners. It would help more than 8,000 in my constituency. Across the country, it could save as many as 4 million pensioners as much as £200 a year on their energy bills, not through spending more money but by getting our energy firms to show greater responsibility to their most vulnerable customers. However, I am afraid this do-nothing Government stand idly by, content to leave Britain’s pensioners paying more than they need to.