Fracking

Debate between David Mowat and Graham Stringer

Tuesday 25th November 2014 Westminster Hall

[Graham Stringer (Blackley and Broughton) (Lab)]

I will be brief, Mr Gray, because the hon. Member for Warrington South (David Mowat) said most of what I wanted to say.

I agree with the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) that it is vital that local communities, however defined, benefit from fracking. It would have been easier to guarantee that benefit under the old rates system, but that no longer exists, so something else needs to be put in place from which the Treasury cannot pinch money.

The hon. Member for Warrington South put well the real debate here, which is about a cautious approach to fracking, but one that recognises that the gas under our feet could represent a huge bonanza for our industry. It might not be, but nobody knows, which is why experiments to find out what is there and whether it is retrievable in a way that is not hazardous to local communities are important. That is the real debate, but it needs to be distinguished from the unreal debate, which comes from those who pretend that the debate is about health and safety, the environment and protection when they are actually, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said, completely and totally opposed to fracking on what I consider to be bogus grounds.

The hon. Lady uses as a basis for opposing fracking the fact that we will not meet our emissions targets. So what? We are hitting our emissions targets—[Interruption.] Well, I will explain it to the hon. Lady, because she is in a fantasy world. In hitting our emissions targets, we are responsible for more carbon dioxide going into the atmosphere than we were before, because of embedded carbon coming in through industrial manufactured goods from China and elsewhere. The hon. Lady’s policy does not help the climate or reduce carbon dioxide. Her policy is about deindustrialisation, which is responsible for increasing the costs of industrial goods in this country by 9%, putting people out of work, and for increasing the cost of domestic energy, depending on how it is counted—by and large, it is not counted properly—by between £50 and £120 a year. The hon. Lady is concerned about carbon dioxide entering the atmosphere, but that is increasing because we are effectively subsidising imports from China and India.

[David Mowat]

The point about embedded carbon is not mentioned enough in such discussions, so it is worth noting that, this year, emissions per head in China exceeded those of the UK, which is an interesting statistic.

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[David Mowat]

Yes, in that context.

[Graham Stringer]

It is very interesting in the context of fracking, Mr Gray.

We need to consider whether we can benefit from shale gas in a sensible and rational way. As hon. Members have said, prices will not necessarily decrease, owing to how the European market works. We will put our gas into that market and it will become diluted and the price will not shift much. However, we should see a benefit from taxation, and we certainly should see a benefit from the congeners of methane within shale gas that will be used by firms such as INEOS as a feedstock. Otherwise, we must be told how our chemical industry can compete with not only the Chinese and their strange accounting system, but the Americans, who have reduced the costs of energy and have cheap sources of feedstocks for their chemicals industry. There will be no such industry in this country if we do not do something about that.

My final point is about renewables. I am strongly in favour of moving into renewables, which can provide security of supply, but we are doing it at the wrong time, which is counter-productive. We need to put huge amounts of money into research, primarily into how to store electricity, because the renewables we have at the moment are not helping our economy. They are damaging our economy. I am not against renewables, but I am in favour of putting a great deal of money into research into better renewables, rather than into the renewables that we currently have.

Energy Company Licence Revocation

Debate between David Mowat and Graham Stringer

Wednesday 3rd September 2014 Commons Chamber

[David Mowat (Warrington South) (Con)]

Thank you, Madam Deputy Speaker. Ten minutes should be fine.

The hon. Member for Blackley and Broughton (Graham Stringer) told me in an earlier intervention that the constituents of Warrington South are interested in energy companies being struck off. What they are interested in is lower energy prices and better customer service. They are not interested in posturing, which has made up much of what has been said today.

When I first read the motion this morning, I thought, “I wonder whether we will oppose this,” because, on the face of it, it is reasonable. I read it quite carefully. Even when I came into the debate, it was not clear to me what we were opposing. However, what the Opposition have failed to do in the motion is to articulate what the problem is that they are trying to solve that cannot be solved in other ways. Apparently, in the past 30 years—in which time, the power did not exist—there have been no instances of behaviour that would have required it to be used. It is fair to say that I am looking at the past and that we should legislate for the future. However, the shadow Secretary of State was twice asked to give examples of the sort of behaviour that would cause the power to be used, over and above the behaviour for which fines of 10% are allowed. Many of the arguments that I have heard today seem to be arguments for increasing the fines. If customer service is poor and behaviour is inadequate, that should happen. However, to take a company out of the market and to reduce choice and competition is the nuclear option, and we should be very clear about why we are using it. The least the industry could have expected the Opposition to do was to give an example of the sort of behaviour that would require this power. We have not heard that.

The analogy of yellow and red cards is an interesting one, but it is not right. Broadly, we understand what a yellow card offence or a red card offence is. There is a progression. If anything, the analogy gives power to the Secretary of State’s point that there is already such progression in the regulation of offences.

The example of Pennsylvania has been given and a couple of Members have talked about the United States. I would be interested to hear, in his response to the debate, whether the shadow Minister can say whether the Pennsylvanians have invoked these powers. I genuinely do not know the answer to that, but my guess is that they have not. The Opposition should understand that the market in Pennsylvania consists of one or two suppliers. In such a market, where the problem of losing customers does not exist to the same extent, it is appropriate for such powers to exist. It is certainly more appropriate than it would be in our market.

The Secretary of State is right to say that when energy companies perform badly, as they have done in many instances—I will not defend that and neither will any other Government Member—they must be held to account. They should be fined more and, if necessary, should pay fines of up to 10%. However, posturing and coming up with things that sound attractive on the doorstep but that do not work is not the way to deal with the problem.

I will talk a little about the need to reduce energy prices. We do need to keep a cap on energy prices. However, the one thing that we never discuss is the fact that over the next decade, we will have to replace about 20% of our generating capacity. That seems to be of little concern to the Opposition because they never raise it in these Opposition debates. We have many, many Opposition debates on energy. It is Wednesday afternoon and I feel quite comfortable being here discussing energy. However, we never discuss our generating capacity, even though £110 billion of expenditure is needed.

By 2017, our capacity margin will be lower than 2%. Nothing is being built at scale at the moment, other than some nuclear stations that will not fill that gap. Demand-side measures have been brought in by the Government, but they will not be enough. Certain nuclear stations were closed over the summer because of safety concerns. Had that happened in the middle of a hard winter, it would have had a profound effect. I would be interested to hear anybody’s comments on that.

[Graham Stringer]

The hon. Gentleman is making interesting points, as always. Does he agree that the Government should look for a derogation from the EU’s large energy plant directive, which will close down some of our fossil fuel plants unnecessarily and exacerbate the situation that he is describing so accurately?

[David Mowat]

I am sympathetic to that view. Countries are acting increasingly unilaterally in the area of climate policy. The fact that the Germans, the Dutch and other countries are building unabated coal power stations at scale raises that question. My honest answer is that we should look at how things develop. Later, I will discuss a vote that took place on 4 December, in which the Opposition went through the Lobby—I do not know whether the hon. Gentleman did—in support of a Lords amendment that would have accelerated the closure of our power stations by bringing in the emissions performance standard for existing stations, rather than just for old stations. That was an extraordinary thing to have happened. The Opposition’s position on coal has, in many respects, been extraordinary.

I want to respond to the remarks of the hon. Member for Llanelli (Nia Griffith) on energy costs. There is a difference between gas and electricity prices. This morning, table 10.2.1 on the website of the Department of Energy and Climate Change, showed that our gas prices for 2013 were lower than median prices in the EU. That is not the case for electricity, and I am pleased that the Secretary of State has asked the Competition Commission about that. However, if we are to debate these matters incessantly on Wednesday afternoons, I think it is worth having a debate based on the facts. I will say this again—hon. Members can intervene on me if they believe it not to be the case—this country has among the lowest gas prices in the EU. If that is the case and if a cartel is in operation, as I have said before, it implies that it is a pretty bad cartel. Nevertheless, let us investigate the industry and have a look.

As I have said about my constituents in Warrington South, what matters are lower prices. The Government have addressed that, just as the Opposition have made suggestions. We want to simplify tariffs and encourage new entrants. We have acted on green levies, and I think the point made earlier about it all being switched to general taxation was wrong. We want better and faster switching.

It is true that the market has been sticky—I am not defending that and it needs to work better. We must make it easier to switch, and some of the things introduced in the Energy Act 2013 regarding compensation to consumers are to be welcomed. In my view, the Opposition policy has three prongs. One is the price freeze, which has been mentioned. The second is what I would generally describe as name calling—describing energy companies as cartels and referring to price fixing and secret deals. All those things are illegal, and if evidence for them exists, it should be brought before the courts. These are public companies, and directors should go to prison if such things are happening. I repeat that if they are happening in the gas market, it is a pretty ineffective cartel, but let us have a look.

The third strand of the Opposition’s policy is that they vote for higher prices whenever there is a vote in this place on how we can influence energy prices. Let me give some examples of that. In 2011, the then Minister was trying to reduce the subsidy for solar panels—solar PV tariffs—from six times grid parity to something like three or four times grid parity. Solar electricity would no longer be six times as expensive as everything else, but four times as expensive. We had a vitriolic response from the Opposition who said that that would see the end of the solar industry and that such subsidies were absolutely necessary. Labour Members trooped through the Lobby to vote against that policy, which was an attempt to minimise the amount of subsidy being given and to reduce energy prices. Well, so be it. That is what happened.

Similarly, we had a debate on the 2030 carbon target. Earlier, the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) intervened on the carbon price floor. I will not defend that; my view is that it is wrong, but it is also wrong for us to impose unilateral carbon targets. These are not EU laws; the EU is not doing this. Again, however, when the issue was debated on the Floor of the House, Labour Members trooped through the Lobby to oppose it. I can only imagine that there are two Labour parties, and I really believe this to be the case. There is the Labour party up in Hampstead—let us call it the north London set of the Labour party—which thinks all this stuff is great, and the other part of the Labour party that represents constituencies where there is energy-intensive industry, and where 700,000 people have jobs that depend on energy prices. If I were one of those people in the Labour party, I would be a little more sanguine.

UK Shale Gas

Debate between David Mowat and Graham Stringer

Thursday 18th July 2013 Westminster Hall

[Graham Stringer]

That is completely consistent with what I was saying—that the fear of the activity, rather than the activity itself, is the problem.

I want now to move on to the science and to speak as a scientist. I agree with virtually everything the right hon. Member for Hitchin and Harpenden (Mr Lilley) said, apart from when he completely accepted what the Intergovernmental Panel on Climate Change said. We must remember that it involves a political process, which lies on top of a number of scientific papers; its work is not necessarily put together by scientists themselves.

The hon. Member for Brighton, Pavilion could be accused of being unrealistically precise in her comments about what is likely to happen in the climate over the coming years, and I would make two simple points about the science. First, I have talked to most of the leading scientists on climate change in this country and in the United States, and there is no known way of distinguishing natural variations in the climate from impacts caused by carbon dioxide—nobody knows how to do that.

Secondly, the models that have been used to predict the increase in temperatures have all been wrong. In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been inaccurate. That is just an indication that there is something unknown about the science, which is not to say that carbon dioxide is not a greenhouse gas, because it clearly is, and it has been known as such for a long time. However, an artificial precision is being introduced into the debate, and it really should not be there. We do not, therefore, often talk about the science.

My next point is about the costs of all the different policies and the price that will result. An interesting report by Liberum Capital indicates the difference between the cost of the Government’s policies on replacing the sources of our energy and the cost of replacing like with like. It finds that there is a difference of more than £200 billion between the two, and that will come out somewhere in the price of gas to our constituents.

The Government’s energy policy is based on taking a long-term position on the price of gas and oil—fossil fuels. Essentially, they are betting the house, the country or hundreds of billions of pounds that the price of fossil fuel will continue to rise. If that happens, and if renewables are put in place, they are likely to win their bet—and it is a bet. They will have to find the capital to fund those renewable energy supplies, but given that prices of publicly quoted shares in the European renewables market have dropped below their level in 2004-05, that looks very unlikely. If the Government lose their bet, our constituents will pay more for their energy than they should.

[David Mowat]

I agree with the point the hon. Gentleman has just made about renewables and potential increases in the price of fossil fuels. Effectively, the Government’s strategy is to use renewables as a hedge against increased fossil fuel prices. That is not altogether unreasonable, is it?

[Graham Stringer]

It would not be if it was just a hedge and it was not artificially pushing the cost of gas and other energy supplies up by holding them in reserve. The hon. Gentleman is right: it is a hedge, but it is a very expensive hedge indeed.

There are two reasons for being against fracking, and the debate has been helpful in clarifying some of the facts. One—it is a completely reasonable to make this point on behalf of constituents—is that people worry when they hear that there is to be fracking in their area. It is therefore quite reasonable for them to ask for the good health and safety standards and good environmental standards that apply elsewhere in the country. However, it is not reasonable to push those standards to the point where the fracking does not happen. When the hon. Member for Brighton, Pavilion talks about the precautionary principle, that is really a way of trying to stop everything. She really should read the Science and Technology Committee report from the previous Session on the precautionary principle, which is often quoted, but it is often used to prevent anything from happening.

Let me give an example. One often has to use the best available evidence to do something, and the reason we are not getting protected areas in the sea at the moment is that the Government are looking for more and more scientific evidence when we should be using the scientific evidence available. If the hon. Lady wants to stop fracking by using the precautionary principle, she is likely to do that, but I think we have to look at the scientific evidence we have and apply high environmental standards.

Finally, I want to put the Government’s energy policy, which is not coherent, in the context of what is happening on emissions worldwide. Much of the Government’s policy is based on reducing emissions, in the belief that that will bring down global warming and slow down or stop climate change. However, the policy is failing, and emissions are going up. With emissions, one has to deal with imported goods, which are often created using industrial processes that create more carbon dioxide than processes here do. If we push up the price of energy here, we will export production to China, India and other places and increase the amount of carbon dioxide. That is a deindustrialisation policy, and I hope that, by exploiting shale gas in a safe and environmentally responsible way, we can start reindustrialising this country and creating the 72,000 jobs or more that it has been predicted will come from exploiting shale gas.

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[David Mowat]

I apologise; it is probably my fault. Just to be clear, the price of solar is something upwards of 45 times the price of electricity produced from gas at the moment.

As for the climate change issues around shale gas, or unconventional gas, I would take hon. Members’ concerns about the impact of climate change more seriously—I am inclined to think that we should address it—if they took a different attitude to nuclear power, the technology that is far and away the most likely, worldwide, to make a difference at scale to carbon emissions.

I want to consider whether shale gas will affect the UK economy. The hon. Member for Southampton, Test (Dr Whitehead) made an interesting speech about the necessary volume of wells. I was not aware of what he said and found his numbers hard to believe, but if they are true, the point is interesting and important. Let us be clear: shale gas is already having a massive influence on the UK economy, because right now one of our major industrial competitors, the US, has energy prices and therefore electricity prices that are a quarter of ours. It has feedstock prices as an input to the global gas industry and the petrochemicals industry that are a quarter of ours. That is already making a difference at the margins. Some industries are already deciding not to invest in the UK and to bring petrochemicals and chemicals back to the US—indeed, out of China, let alone Europe. Shale gas is already having a massive impact on the UK economy, and it is nonsense to pretend that anything we say in this debate, or that the Government do, will make any difference to that.

[Graham Stringer]

One of the points that has not been made is that there is a slight assumption that shale gas is just methane. It is actually ethane and propane as well, and those can be used as feedstock to our chemical industry, lowering chemical prices and making the industry more competitive.

[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.

High-Speed Rail

Debate between David Mowat and Graham Stringer

Wednesday 2nd November 2011 Westminster Hall

[Graham Stringer]

The hon. Gentleman is right. Even though I am a member of the Labour party, I am always slightly cautious about having the perfect plan. When one is involved in transport plans or economic development—it does not matter whether it is in the private or the public sector—one has to be opportunistic and take what is there. Sometimes it can take too long to wait for the perfect plan. That does not mean that we should not think about how we can connect different parts of the system.

Like the hon. Member for Blackpool North and Cleveleys, Action Alliance makes the point that high-speed rail does not automatically bring with it economic benefits. Let us take, for example, the economies of Manchester and London, or Birmingham and London. Some argue that high-speed rail exposes them to bigger markets, which is true because the train goes both ways. A dynamic city or region is at a real advantage. What city would not want to be in a bigger market so that they can attract more people and investment? Although it is possible to fail in such an area, it is easier to succeed if there is high-speed rail.

[David Mowat (Warrington South) (Con)]

I, too, was struck by the Action Alliance analysis that when we improve connectivity, the stronger city benefits and the weaker city loses out. If we follow that logic through to the end, it means that we should close the M6, the M1 and the west coast main line, which is ridiculous.