Contribution
My Lords, I declare my interests as chair of Amey, Acteon and Buckthorn.
This Statement comes at a time when the United Kingdom faces major, unparalleled challenges to its energy supply. For 50 years, under successive Conservative and Labour Governments, energy policy has been built on the four pillars of security of supply, diversity of supply to back that security, stronger adherence to ever-improving environmental measures, and, above all, affordability. On all four tests, this Statement fails, and the current war in Iran exposes that the Government’s energy policy is uniquely vulnerable to international supply chains, unaffordable to industry and households alike, glaringly insecure and unashamedly reliant on putting intermittent power before the firm power needed to keep incubators in our hospitals running 24/7, 365.
The Statement argues that there is no point drilling in the North Sea because all our gas is sold on international markets. Does the Minister agree that this is nonsense? Every molecule of gas we extract from the North Sea goes straight into our pipes, making up around half the UK’s supply. Does the Minister agree with the North Sea operators and OEUK that data already submitted to government details 111 named projects, equivalent to £50 billion of investment, that could be unlocked with tax and regulatory reform? On security of supply, we are increasingly vulnerable. Does the Minister accept that we have one pipeline coming to the UK from Norway alone, which is responsible for 30% of our gas supply? As the eminent economist Dieter Helm stated, is this not a sitting duck for a hostile power or an obvious hit for drones in the North Sea?
Does the Minister agree that onshore economically, the UK is facing the highest industrial power prices in the world, crippling our industry and increasing our cost of living? Does he agree that we are failing our energy-dependent industries because we have unaffordable energy prices? Gone is most of the steel industry. Deeply damaged is the fertiliser industry. Through the imposition of additional energy costs this year, the ceramics industry is under threat, as are petrochemicals and refined fuels.
Turning to capacity, does the Minister agree that we already need twice the capacity, twice the grid and all the batteries and storage we can find, plus many more interconnectors, to service a level of power demand of about 45 gigawatts? We used to meet that comfortably with just 60 gigawatts of capacity. Does he not recognise that all this is because we must have therm power available on days like today when the wind does not blow? Only 16% of our electricity was generated from wind today—only double that from the heavily polluting, burning biomass of 7 million tonnes of wood pellets a year in Drax.
Turning to renewables, does the Minister agree that there was good reason for the late publication of the secret MoU between the Secretary of State and the Chinese Government? It demonstrated that not just our renewable energy policy but our overall energy policy is tethered to China, a country which burns more than 55% of the world’s coal and is building another 400 gigawatts of coal generation. Yet our imports of solar panels are nearly 100% imported from China and demonstrate our serious reliance on a foreign state, not least because, as the Minister said from the Dispatch Box recently, he cannot be sure that the solar panels being installed in our schools are not made by slave labour.
Does the Minister agree with me that we need a policy built on renewables and more North Sea gas—not renewables instead of gas? Does he also agree that energy security and affordability depend on a substantial increase in gas from the North Sea, not imported LNG, which has gone up 40% year on year and which, in its total life cycle, emits nearly twice the levels of carbon compared with North Sea gas? The Government need to secure our own gas reserves, first, by a fiscal and regulatory regime which immediately encourages more tiebacks and greater exploitation of existing reserves, then by a licensing regime which ensures that production comes on stream at the same time as new-build nuclear.
None of what I have said this evening is anti-renewable; indeed, when I was Minister for Energy, I launched the first renewables non-fossil fuel obligation and for many years I was president of the British Wind Energy Association. I have set out a direction through which the UK is more energy secure, not less, with more affordable and environmentally acceptable energy; and through which it is more prosperous, with more jobs for working people, greater economic confidence, higher growth and a lower cost of living.