It is certainly true, as the hon. Gentleman says, that we waited a long time for the draft Energy Bill. I think that the industry, the non-governmental organisations and the academic world were all hoping to see it appear a lot earlier than last summer. Our Committee was given a very limited period—about half the time normally given to Select Committees to comment on a draft Bill. We completed our work—with great assistance not just from my colleagues on the Committee, but from
the staff—in about six weeks. Having received our recommendations at the end of July, we waited another five months before the actual Energy Bill was published, although I recognise that some of that period was used in the negotiations on which I have already congratulated the Secretary of State. The Public Bill Committee stage was completed in the first week of February, however, and we have now waited a further four months to get to Report, so the matter has not been conducted with the urgency that I think the needs of the situation required.
The understandably envious glances cast across the Atlantic by the Treasury at the transformation of the US gas market in the wake of the exploitation of shale gas have not passed unnoticed. Not surprisingly, there are now doubts in the minds of many prospective investors about the depth of the Government’s commitment to decarbonising electricity generation.
Incidentally, the Energy and Climate Change Committee was one of the first bodies to urge the Government, more than two years ago, to approve more exploration and testing to establish the scale of Britain’s recoverable shale gas reserves. If our dependence on imported gas can be cut and if consumers can be partially protected against fluctuations in international gas prices, which have been the main cause of the rise in domestic energy prices in the last few years, that is wholly to be welcomed. However, my Committee also warned, in a more recent report on shale gas, that it would be rash to base energy policy on the assumption that Britain will soon be a major shale gas producer. The opposition to exploring for shale gas in Sussex, which is already emerging, is a foretaste of the battle for public opinion, which must be won before domestic production of shale gas on even a modest scale can occur. The case for a diversified energy mix is therefore as strong as ever.
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Secondly, although we hear regular warnings about a looming capacity crisis in electricity generation and the consequent risk of power cuts, there is a curious complacency about the Government’s attitude. Investment in new generating capacity is now at a low level. The nuclear talks between the Government and EDF remain unfinished. Even if, as I now hope and expect, they are brought to a successful, albeit belated, conclusion, it will be 2020 at the earliest before a single kilowatt of electricity is generated by a new nuclear power station in Britain. New investment in coal is unlikely to occur until an economically viable form of carbon capture and storage is available. Despite the huge potential market for CCS, there is no sign anywhere in the world of that happening. I am an enormous fan of CCS—it is the single technology that the world most urgently needs to address climate change—but we might have to wait another decade or even longer for a breakthrough on that front.
Meanwhile, coal can be imported cheaply from America, so our remaining coal-fired power stations are running flat out. Gas generation—the great white hope of many people—is currently so unprofitable that, far from large-scale new investment taking place, some plant is currently mothballed. Critically, potential investors in gas generation are holding back until the details of the Government’s
proposed capacity mechanism are known. I urge my right hon. Friend the Secretary of State to publish the details as soon as possible.
With a decision on nuclear still awaited and with fossil fuel generating investment at a standstill, it might be thought that money would pour into low-carbon renewables, but even there the picture is unclear. For example, according to new figures from Bloomberg, the flow of funds is actually slowing down. Doubts about whether a future Government will remain committed to supporting low-carbon technologies after 2020, fears that instead they will bet the farm on another dash for gas, and a lack of clarity about the level of strike prices to be proposed for the new contracts for difference regime have all unsettled investors. The only certain consequence of this is that investment will be slower and the risk of a capacity crisis greater.