Energy: Gas Supplies

Lord Marland Excerpts

Wednesday 12th October 2011 Lords Chamber

[Lord Ezra]

To ask Her Majesty’s Government what are the prospects for gas supplies during the coming winter.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, National Grid published its Winter Outlook 2011/12 report on 11 October. Its assessment of UK gas security of supply for the coming winter is broadly benign, with lower domestic production being offset by the expectation of more imports, especially of liquid natural gas. The Government will work closely with National Grid and the energy industry to monitor the ongoing energy supply situation during the winter months ahead. We will also be publishing the statutory security of supply report together with an assessment of the security of supply risk in the gas market later this autumn.

[Lord Ezra]

My Lords, I thank my noble friend for that reassuring reply. Nevertheless, things can go wrong, so what is the Government’s policy on gas storage capacity? Our current capacity is now well below that of continental countries, has fallen back in the past year and is the one big reassurance we could have if supplies should be interrupted during critical winter periods? In the longer term, when will our demand for gas, 60 per cent of which now has to be imported, be reduced so that we are less reliant on the vagaries of the import market?

[Lord Marland]

Let me continue in the spirit of bonhomie and welcome the noble Lord’s return—

[Noble Lords]

Hear, hear.

[Lord Marland]

I obviously recognise his strong track record of expertise. It is normally about this time of year that the House has a searching Question from the noble Lord and I am grateful for it. I can also assure him that this Government are deeply committed to storage. We inherited seven storage units for 16 days’ supply, we have four under construction and we have granted planning permission for another nine storage units. We take this matter seriously.

As for the other question about European gas storage compared with ours, we have to remember that 40-50 per cent of our gas supply comes from our own resources, 20 per cent comes from a dedicated pipeline from Norway and we have a good relationship with Qatar, with a guaranteed 10 per cent from there. So we are not in the same position as, perhaps, Germany, which is dependant upon the Eastern bloc for its supply. We get less than a half of one per cent from that source.

[Baroness Worthington]

Does the Minister agree that one way of reducing our dependence on imported gas is to invest in renewable forms of heating fuels? When will the long-awaited renewable heat incentive be open for business? At this rate, it will not be ready for people to invest by next winter, let alone this winter.

[Lord Marland]

I think the noble Baroness touches on the problem of Europe agreeing our tariffs for the renewable heat incentive where we propose aggressive and supportive tariffs for people in biomass and creating biomass boilers. They were rejected by the European Union, which said that they were unfair. We have looked at them again in earnest and certainly by the end of November we shall have responded to the EU with a negotiated position. We are deeply committed to it. As the noble Baroness rightly pointed out, it is fundamental to our energy security supply that we wean ourselves off oil in particular and coal, which are no longer supplied by ourselves.

[Baroness Oppenheim-Barnes]

My Lords, to depart briefly from the bonhomie, will my noble friend tell his right honourable friend the Secretary of State for Energy from me that it took me three months on two separate occasions to change from British Gas to another supplier? To say that people are lazy not to change means that what happens in the real world is completely beyond his comprehension.

[Lord Marland]

The noble Baroness is of course known for her energy and it is not surprising that she is playing the markets. We completely agree with that. It is amazing what happens on the internet these days. This is obviously a matter for Ofgem, we are concerned that it frees up the markets so that the noble Baroness and all of us can take full advantage of competitive terms out there. Rest assured, we march shoulder to shoulder in a bonhomous way, even if she does not think so.

[Baroness Smith of Basildon]

The Minister referred to the National Grid’s winter outlook report and called its assessment benign. What it actually said was that the total energy supply this winter should be manageable under normal conditions. Given the complete inability to provide accurate long-range weather forecasts and the wild fluctuations in weather we have seen, what discussions has he had and what arrangements are in place with the National Grid and energy supply companies to ensure supplies should weather conditions not be normal?

--- Later in debate ---

[Lord Marland]

The noble Baroness is right. We had a very abnormal winter last year. As she has clearly read the National Grid report, which I am delighted to see, I direct her to page 33, which clearly sets out the various pressure points in terms of a cold winter, a variable cold winter and so forth and how we have coped with it. I am glad to say that, broadly speaking, we came through with flying colours from a gas point of view. That is not to say that we can be complacent: we must not. We have a serious task to make sure that everyone in this country is supplied with gas and oil in an awkward winter and I assure noble Lords is that this Government will not be complacent.

[Lord Faulkner of Worcester]

My Lords, in his Answer to the Question from the noble Lord, Lord Ezra, the Minister referred to gas supplies from Norway. Does he envisage that the proportion of gas imported from Norway will increase and how does he see the future of LNG from Norway in the future?

[Lord Marland]

I do not think that it will increase from the dedicated pipeline. But we have spent a lot of time—and the previous Government should be credited for this—upgrading our LNG ports so that they can attract LNG from every source. We are reliant on 10 per cent of our supplies from the world market, and Norway almost certainly can be part of that.