UK Shale Gas

Debate between Dan Byles and David Mowat

Thursday 18th July 2013 Westminster Hall

[David Mowat]

I thank the hon. Gentleman for that point. He is completely right. Indeed, it would be more accurate for us to talk about unconventional gas than about shale gas, because coal gas is also part of what we are discussing.

Clearly, there is already an impact on the UK economy. I used to do a lot of work on the correlation between energy prices and GDP. They are closely correlated, and particularly so if we are trying to rebalance the economy back towards manufacturing, chemicals, aluminium, steel and chlorine production, and all that goes with that. We cannot do that if we have differentially higher energy prices than our competitors. I refer mainly to the US, although there is increasing concern that the rest of Europe is taking a different path from the UK on carbon taxes, and so on. It is right to let shale gas go ahead and let the market define prices and how things will work.

In the US, the gas price has fallen from $12 per million British thermal units to about $3. The cost of importing liquefied natural gas, if its export is allowed, is about $5. That implies a cap on European gas prices if there were a free market; and the hon. Member for Southampton, Test is right to say that there are three gas markets currently. Such a move would imply a cap of about $8 or $9, which is considerably lower than now, although I accept that for strategic reasons the US Government might not agree to export any gas at all.

My hon. Friend the Member for North Warwickshire (Dan Byles) made an excellent point about climate change. The issue about climate change and gas emissions is how we get coal out of the system. The UK still produces 70% of its energy from coal and oil and something like 3% or 4% from renewables, taking into account transport as well as electricity production. The UK has lower carbon emissions per head and per unit of GDP than nearly every country in Europe, in spite of the fact that we have less in the way of renewables. The reason is that we burn less coal than most countries in Europe. Incredibly, apparently aided and abetted by members of the Green party in Germany, a programme has kicked off there to build 10 or 12 unabated coal-fired power stations.

[Dan Byles]

Lignite.

[David Mowat]

They will burn, as my hon. Friend says, a dirty coal. It is extraordinary that that is happening right now in the EU, and even more extraordinary that there appear to be members of the Green party in that country’s Government while it is happening—the same Green party that purports to care about carbon emissions and climate change.

Energy Bill

Debate between Dan Byles and David Mowat

Wednesday 19th December 2012 Commons Chamber

[David Mowat (Warrington South) (Con)]

The overarching policy statement sets out the context of the problem we are trying to solve, and to which there are three dimensions: cost, decarbonisation and security. We have heard quite a lot about decarbonisation, and something on security, which has two parts to it: the level of imports that we continue to need and keeping the lights on. We have heard less about cost, and I will also talk about that.

On security, the big issue unique to the EU is that we must spend £200 billion on new capacity in the next two decades. The companies that need to spend that money are more or less the same companies that we have heard so much about from the Opposition, who say they are ripping off consumers and so on. I gently say to the Opposition Front Bench, and to other hon. Members, that if that sort of language is heard in the boardrooms of some of those companies—which, due to the previous Labour Government, are now principally foreign-owned—it will not be an incentive to invest in our country. A great deal of work needs to be done on that. The biggest source of the increase in electricity supply in the past three years has come from imports through the interconnectors from France and Holland. That is a failure.

On cost, fuel poverty increased from 6% to 16% in the decade up to 2010. It is not possible to grow an economy with differentially high energy prices, particularly when trying to rebalance it towards manufacturing. We must be cognisant of that.

It is right that we decarbonise, but decarbonisation comes at a cost. Ministers must accept that there is a cost to be paid and not hide behind savings from better energy use and all that goes with it. We need to win that argument, otherwise the whole thing will unwind over the next two decades.

I want to ask Ministers about a particular issue. Hon. Members have talked about the European dimension and globalisation. The hon. Member for Stockton North (Alex Cunningham) rightly said that we are 25th out of 27 when it comes to renewables, although that—I gently tell him—is something we inherited in 2010. Nevertheless, it is true. It is also true, however, that we are one of the best when it comes to carbon per head and carbon per unit of GDP. In particular, Germany uses 30% more carbon per head than we do and 25% more per unit of GDP. It is often set up as an exemplar when it comes to renewables, and it is true that it has a lot of renewables, but the reason it performs so much worse than us is that it burns so much coal.

[Dan Byles]

Does my hon. Friend find it remarkable that Germany chose to switch off its nuclear fleet and replace it with a new fleet of additional coal-fired power stations?

[David Mowat]

It is more than remarkable. Germany has also banned carbon capture and storage. That says to me that the people in the heavy industries of the German economy will not put up with differentially high energy prices. Germany is about to build 23 unabated coal-fired power stations. We have heard about how the Opposition Front-Bench team apparently do not want us to build gas-fired power stations, but the amount of carbon coming out of coal-fired stations is huge.

Shale gas will probably not change the world. It has already happened in the US, which now has gas prices one quarter of ours, and it will use that to suck in the chemicals industry and the global chemicals capacity that we need in places such as Teesside and Stockton North. It might well be true that we will never get our gas prices down to the level in the US, but something has happened structurally in the world when an economy the size of the US has energy prices one quarter of what they are in Europe. We need to be cognisant of that and respond. PricewaterhouseCoopers has estimated that the benefit to US heavy industries of differentially low energy prices is $12 billion a year. Our shale gas prices might not deliver that, but shale gas could have a big impact on our economy.

I would like Ministers to consider certain actions. The first relates to honesty. If we must decarbonise, let us say that there is a price to it. Let us not say that it is actually cheaper. It is true that renewables are a hedge against rising fossil fuel prices—I do not hear that argument being deployed often enough—but it is also true that, at least for the foreseeable future, they are more expensive. We need to win that argument and take it head on, otherwise we will lose it incrementally. That is very important. Secondly, we should take on the EU over the confusion between renewables targets and decarbonisation. We are trying to decarbonise, not get higher up on a graph of who has the most renewables. They are not the same thing.

High-Speed Rail

Debate between Dan Byles and David Mowat

Thursday 31st March 2011 Westminster Hall

[Dan Byles]

I give way to my hon. Friend the Member for Warrington South (David Mowat)

[David Mowat]

I want to make the same point. A recent survey by the West Midlands Chamber of Commerce, which I think includes Coventry and north Warwickshire, estimated that there would be £6 billion of wider economic benefits. Does my hon. Friend not believe that some of that would go to his constituency?

[Dan Byles]

North Warwickshire council and, I believe, Warwick district council, as well as Warwickshire county council and Staffordshire county council, have all come out formally against the proposal. They obviously do not believe that there will be wider economic benefits for the midlands and their council areas.

The point made by my hon. Friend the Member for Wimbledon (Stephen Hammond) demonstrates that we need to do more work before spending 17 billion quid of taxpayers’ money. If some reports say one thing, and others say something else, where is the fundamental, independent, root and branch economic analysis of existing high-speed rail systems in other countries around the world? I genuinely do not believe that what HS2 and the Department for Transport published represents that.