Energy Bill

I should like to make a bit more progress with my speech before I give way again. I hope that the House will allow me to do that. Measures in the Bill to reform the renewables obligation will increase the amount of electricity that we get from renewable sources. Other measures will help to support the deployment of new nuclear power and to enable investment in carbon capture and storage and in offshore gas infrastructure. All of those will help cut carbon emissions, increase the diversity of our energy mix and improve our energy security—important goals that I hope will gain the support of Members of all parties. The Bill also implements key parts of our energy White Paper strategy. It will update the legislative framework to achieve three particular things: first, to reflect the availability of new low-carbon technologies; secondly, to meet our changing requirements for security of supply infrastructure; and, finally, to ensure suitable protection for the environment and the taxpayer as our energy markets change. The Bill is divided into six parts. Part 1 relates to offshore gas importation and storage. As the UK increasingly relies on international energy markets, our strategy for ensuring secure energy supplies must also evolve. Competition for energy supplies is increasing. The International Energy Agency forecasts that inter-regional trade in gas will more than double by 2030. The UK currently imports about 20 per cent. of its gas requirements, but as many hon. Members will know, that is projected to increase to well above 50 per cent. by 2020 as supplies from the UK continental shelf decline. Part of our response to that challenge must be to ensure that companies have a clear regulatory framework for investing in the new offshore storage and import infrastructure that our country requires. Current offshore legislation was designed principally for oil and gas production or extraction. As a result, there is no single piece of legislation that covers the new kind of offshore gas infrastructure that we in the UK need. The current regulatory process is therefore complex and fragmented. It must be improved and streamlined if new investment is to take place in the time scale that we are discussing. Through clauses 1 to 15, the Bill creates a new regulatory and licensing framework specifically designed for offshore gas storage and offshore LNG—liquefied natural gas—unloading projects. That will simplify the regulatory process and will, I hope, create greater clarity and certainty for investors. The Planning Bill, which I have already mentioned, will streamline the consenting processes for onshore gas projects. The Energy Bill will create a fit-for-purpose regime for offshore gas projects. This part of the Bill also creates a new regulatory framework for offshore carbon dioxide storage projects. Fossil fuels will continue to be part of the UK's diverse energy mix for decades to come. On present policies, global energy demand could be more than 50 per cent. higher in 2030 than it is today. With a significant percentage of that being met by fossil fuels, energy-related greenhouse gas emissions could be around 55 per cent. higher than today. Finding a way to reduce the emissions from fossil fuel generation is therefore absolutely essential if we are to meet the challenge of climate change. That is why the Government are supporting a competition for the demonstration of carbon capture and storage. Clauses 16 to 34 will establish a licensing framework that allows storage of carbon dioxide under the sea bed. Without the new legislation, I do not believe that that demonstration project could proceed. In addition to making provision on licensing, the Bill will also assert the UK's rights to store carbon dioxide beneath the UK sea bed and extend relevant existing offshore legislation—on the decommissioning of offshore gas installations, for example—to future facilities that might be used for carbon dioxide storage. That is a key part of enabling the long-term development of carbon capture and storage. Once constructed, the demonstration project, which we hope will be operational by 2014, will be one of the world's first commercial scale power stations with carbon capture and storage. Our aim is to drive forward the development of a technology that has the potential to reduce carbon emissions from fossil fuel power stations by as much as 90 per cent.