Fracking
Debate between David Mowat and Julian SturdyWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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David Mowat (Warrington South) (Con)
It is a pleasure to speak in the debate and I congratulate the right hon. Member for Lewes (Norman Baker) on securing it. I agreed with the first part of his speech, when he said that energy policy has three components—low cost, security of supply and decarbonisation—but we perhaps parted company afterwards.
There is no contradiction in supporting renewables and supporting fracking. In this country, renewables represent one tenth of the energy we get from coal and oil. I would like renewables to grow faster, but part of reducing carbon—I will say more about this later in my remarks—is the displacement of coal, which is very polluting, by gas. In the United States of America, there has been a massive reduction in carbon due to the shale revolution.
People have said that we should not bet the whole farm, or the whole world, on shale, and I agree. Nobody is saying that shale is a panacea to fix everything. However, we should evaluate the potential of shale in a safe, constructive and thoughtful manner. That is all I am saying.
People sometimes ask, “Should we frack or not frack? Should the world go down this route?” The world has already started down that route, and it is worth pausing to consider what has happened in the USA during the past 10 years. Yes, part of the picture is that gas prices have fallen from $10—roughly speaking, that is still the price in the UK—to something like $3 or $4, or by a factor of about a third. The consequence of that is lower domestic prices, less fuel poverty and a much revitalised manufacturing industry, as well as lower costs of feedstock for use in the petrochemicals industry, which has seen a renaissance in the USA.
We may not want a part in any of that—in Lewes, it may not matter, but it matters on Teesside, where marginal chemicals investment decisions are being made on whether to put the next production unit or piece of kit on the eastern seaboard of the USA or in our country. It also matters in what I have heard described as the “desolate north-west”, where a large number of jobs depend on energy-intensive industry. About 900,000 people in our country work for industries that rely on relatively cheap energy. For us to say that that does not matter, or that we should ignore it, strikes me as arrogant, wrong and disappointing.
I have heard it said, including today, that fracking will not reduce the price of gas in Europe. That argument is a reasonable one. We have a European gas system and get most of our gas from Europe—in fact, from Russia—and not than from the UK, although we are getting some from the UK. It is true that fracking will not automatically reduce cost but, generally, when there is more of something, the price comes down.
Julian Sturdy (York Outer) (Con)
My hon. Friend was probably coming on to the point I want to make. Is it not the case that oil prices are currently falling as a result of the worry in the middle east about competition from the US in the form of shale gas?
David Mowat
My next sentence would have been that oil prices have fallen by about a third in the past three or four months, because the USA, which was a large global market for oil, is no longer importing oil. The result is huge in terms of geopolitics and the position of countries such as Saudi Arabia. Of course, that cost reduction would happen with gas, too.
It is not only the cost of the material that matters, but the economic activity that comes with exploiting it. Such activity is not a displacement of renewables. Aberdeen and the areas around it have the four parliamentary constituencies with the lowest unemployment rates in the UK—the rates are lower even than those in the south-east of England and London. That record has been built on the back of the North sea oil industry, and some of that activity will happen if shale reaches its true potential.
People have said that that potential may not be there. I believe I heard the right hon. Member for Lewes say that the reserves may not all be recoverable. That is true. The assumption is that 10% of the technically available reserves will be recoverable. If so, that means 50 years of supply in the UK. It may not be that 10% is recoverable—it may be 1%—but let us find out, because a load of MPs in a room talking about it will not allow us to understand whether the true figure is 1%, 10% or 15%.
I mentioned our energy security and gas imports. They mostly come from Norway, but increasingly come from Qatar. The first contract between Centrica and Gazprom has been signed, starting now, so gas is also starting to come from Russia. The gas situation has changed in the past 15 years. Previously, we were a gas exporter, but no longer.
It is also true that we have security of supply problems in terms of keeping the lights on in this country. During the past decade or two, we have failed to replace power stations. We are turning off our coal-powered stations—we are the only country in Europe doing that at scale. The consequence is that the capacity margin here for next year is thought to be 2%. We are not building any kind of power stations. That needs to change. The Minister might well talk about that in his remarks.
Any student of the subject who does not believe that nuclear power globally is part of the decarbonisation solution does not have a thoughtful response to offer. Last year and the year before, 87% of the world’s energy came from fossil fuels. Of that, by far the majority came from coal and oil. If we could replace that coal and oil with gas—that is a big aspiration and it will not be done overnight—it would be equivalent in decarbonisation to the world increasing by nine times existing global renewables.
Energy Bill [Lords]
Debate between David Mowat and Julian Sturdy
Julian Sturdy (York Outer) (Con)
It is a real pleasure to contribute to today’s Second Reading debate. I have a long-held interest in energy-related matters, and I strongly believe that the Bill contains some really positive measures that, together, will lay the foundations for a fairer, more efficient and greener energy market across the country.
Although wide-ranging initiatives covering energy efficiency and the empowerment of the Coal Authority are present in the Bill, it is clear that it is only the first legislative part of the Government’s promised energy reform programme. Missing from the Bill—this is no criticism of it—are provisions relating to the regulation of carbon emissions, the creation of a green investment bank and the security of energy supply, which I think is immensely important and on which a number of Members have touched. I see energy security, along with food security, as being the defining issue over the next decade. The decisions that we take in this Parliament will affect generations to come, so we have to get them right.
It is my understanding that, as the Secretary of State outlined earlier, a second energy Bill is planned for the autumn, to provide the missing pieces of that important jigsaw. In light of that assurance, I must confess that I am extremely optimistic about the Government’s energy ambitions, and thus very supportive of the Bill. However, I would not want to see the time scales in the Bill slip any further. Energy security must not become a political football, because it is far more important than any party politics.
I wish to focus my thoughts on the attempts in the Bill to improve energy efficiency. Such improvements must be made if we are to meet our international and domestic climate change targets—after all, energy efficiency can play a major role in cutting energy use and emissions of harmful gases. Alongside our requirements to meet international targets, we must tackle once and for all the tragic and unnecessary problem of fuel poverty here in our own towns and cities, and we must also bear in mind the often vast financial cost of energy to ordinary households. Together, meeting legal targets, tackling fuel poverty and reducing families’ energy bills make up the triangle of criteria by which we must scrutinise the Bill and judge its success.
In discussing a new approach to energy efficiency, it is worth briefly reviewing previous policies and schemes. The decent homes programme and the Warm Front scheme are two examples. I strongly believe that lessons can be learned from those programmes, particularly Warm Front. I have recently been actively engaged with Warm Front through the provider of the scheme, Eaga, on behalf of local constituents.
As hon. Members will be well aware, Warm Front offers grants to enable certain households in fuel poverty to install energy efficiency improvements such as home and loft insulation and heating measures. Unfortunately, in my constituents’ case, applying to Warm Front to get a new boiler to replace one that was broken took over 13 months. The paperwork was burdensome, and the inefficiency and bureaucracy of the system beggared belief at times. Spending on the Warm Front scheme and its predecessors has totalled £2.6 billion between 2000 and 2011, yet at national level too many homes, particularly in vulnerable communities, remain poorly heated and insulated. I urge the ministerial team to ensure that future schemes under the new proposals are accessible to more people, easier to follow and less bureaucratic in nature. Even those simple changes would, in my opinion, encourage households to take advantage of such Government-led measures.
For the time being, despite huge investment in various schemes, the simple truth is that too many properties continue to achieve very poor energy efficiency ratings. We must embark upon a new pathway, and the Bill provides us with a perfect opportunity to do so through the green deal. To coin a phrase, it is a game changer.
The green deal clearly has a mammoth task ahead. I am excited about the realistic tone, and the practical and flexible nature, of the policy. The current lack of investment in efficiency priorities is not only the result of poorly administrated Government schemes such as Warm Front, but because too many households have been put off by the time and money that it takes to benefit from implementing energy efficiency measures.
When tapping into the green deal, customers can take advantage of up-front money to make responsible energy efficiency improvements. Repayments will be attached to energy bills at the property, rather than the individual having an obligation to pay the money back or pass the cost of improvement on to a future owner of the property. That is an important part of the Bill, because it is increasingly clear that the younger generations move more frequently and more widely than generations before them. That simple measure will in effect encourage participation in the green deal through the flexible transfer of responsibility for repayments to whoever benefits from efficiency savings. Although I am very much in support of the principle, I look forward to more detail as the Bill develops.
I am conscious of the time, and that other hon. Members want to speak, but I shall add another note of caution, which my hon. Friend the Member for Northampton South (Mr Binley) mentioned earlier. There should be further incentivisation measures in the green deal. As the CBI has said, there is concern that the policy, which is a truly exciting one, could become a lame duck if people are not truly engaged to take it up. We must not let that happen, because the consequences are too important.
We should not understate the importance of making a breakthrough in improving energy efficiency in this country. It is therefore imperative for the Bill to win cross-party support and progress successfully. I have been heartened by many of the comments made on both sides of the House this evening. If progress is made, the framework to establish the green deal will be in place, and we can be far more optimistic about meeting our emissions targets, reducing energy bills, tackling fuel poverty and contributing to a greener and fairer energy market. I hope that Members on both sides of the House support those objectives.