Energy Prices

Debate between Steve Baker and Alan Whitehead

Wednesday 19th October 2011 Commons Chamber

[Steve Baker]

I am very grateful to the hon. Gentleman. It seems that these days we throw billions around casually, but those are enormous sums of money.

I turn, then, to more billions that are being thrown around. I have learned from Matthew Sinclair’s “Let Them Eat Carbon” that the EU emissions trading scheme is costing European consumers €15.5 billion a year and British consumers €2.2 billion a year. It seems to me that if we are truly concerned about what the poor and the strivers are paying for energy, we should look extremely carefully at such distortions to market prices. I note that because the carbon price collapsed under the EU ETS, we are now looking at a carbon floor price of £30 a tonne. Having tried to introduce a particular market-based mechanism and found that it does not work, we are now introducing a particular piece of price fixing. I am not at all convinced that that is a good idea.

Traditionally, Governments have interfered to pick winners, but it seems that at the moment they might be interfering to pick losers. I note that under feed-in tariffs, onshore wind receives £45 per megawatt-hour, whereas solar panels receive £400 per megawatt-hour. I am not sure those prices are a good use of taxpayers’ money, or of the system of feed-in tariffs, in the context of the shale gas resources that exist. I might go so far as to say that we seem to be entering some kind of Hegelian dialectic, in which on one hand we agonise over the price of energy and on the other hand we implement Government policies that seem deliberately to elevate energy prices, in the hope that some synthesis will emerge.

[Dr Whitehead]

Before the hon. Gentleman gets completely carried away with the shale gas paradise, does he not understand that it is an unconventional gas supply and therefore very expensive to extract? Does he also understand that Deutsche Bank, in its recent review of energy prices, stated that unconventional gas supplies in Europe would have no discernible effect on future gas supplies, because of increasing demand across European and north American markets as a whole?

[Steve Baker]

I think perhaps the hon. Gentleman and I will have to put our researchers in a room and have them fight it out, because my information is that the Deutsche Bank report has stated that a quarter of UK households could be driven into fuel poverty by being priced out of the market; that the most effective policy to bring energy costs down would be to abandon our unilateral renewables obligation, which would save 15% on costs; and that shale gas utilisation would save a further 15%.