HL Deb 10 May 2001 vol 625 cc1074-6

11.52 a.m.

Lord Ezra asked Her Majesty's Government:

Whether there could be a shortage in the supply of gas at peak periods.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, there are provisions in the regulatory framework to ensure that shippers and suppliers take adequate steps to meet peak demand for gas. The independent regulator, Ofgem, has recently brought forward proposals to add to this framework. In addition, there are well tested procedures within the industry to manage any shortfalls in supply, such as drawing on gas from storage and invoking interruptible contracts. I can assure the noble Lord that Her Majesty's Government and the regulator are fully aware of the importance of all aspects of security of supply and that we continue to keep them under close review.

Lord Ezra

My Lords, I thank the noble Lord for that reassuring response. Is he aware of recent reports that in peak periods of a harsh winter the gas supply might be short? Is he further aware of the doubts expressed about the efficacy of the gas pipeline due to a shortage of maintenance engineers? In those circumstances, would it not be right to put even greater emphasis on diversity of supply, notably from renewables and from the development of clean coal technology?

Lord Sainsbury of Turville

My Lords, as far as I know, there has been only one instance of concern about the Interconnector and how it was operated in a situation where there were conflicting demands on it. That was the incident on 15th January 2001 when the flow of gas in the Interconnector was from a high price in the UK to a slightly lower one in Zeebrugge. That was a cause of concern and that is why we have asked the European Commission to look at the governance of the Interconnector. It was possible to deal with that situation in a reasonably favourable way. There are strong reasons for having diversity of energy supplies, including renewables, but that is a wider and more important issue than simply the failure of the Interconnector to achieve the right economic fundamental result on one occasion.

Lord Hardy of Wath

My Lords, although it is gratifying that the Government have thought seriously about the problem, is it not the case that the arrangements in place will be increasingly tested as we move further into a dependency on overseas gas supplies? In that connection, could not the points made by the noble Lord, Lord Ezra, be given further consideration?

Lord Sainsbury of Turville

My Lords, it is certainly true that as we go, as we almost certainly will, into a period when rather than exporting gas we import it—that is likely to take place in 2005—the Interconnector will become even more important to the interests of this country. It will be essential that the governance of the Interconnector should be of the highest standard in reflecting economic fundamentals rather than any other considerations. Over and above that, we want diversity of energy supplies because that is key to our security in a much wider sense.

Lord Trefgarne

My Lords, given the inevitability of a shortage of gas supplies sooner or later, can the noble Lord say whether the Government have investigated the possibility of generating gas from our large coal resources, which are now largely unexploited?

Lord Sainsbury of Turville

My Lords, I cannot give a precise answer to the noble Lord, but we will have to look increasingly at energy research to ensure that we have the best research on the most promising areas. That will ensure that we have the greatest diversity of energy sources as we go from being self-sufficient in energy to being reliant on other countries for our energy.

Lord Merlyn-Rees

My Lords, who is now responsible for the clean coal research that used to be carried out by the Gas Corporation?

Lord Sainsbury of Turville

My Lords, there is a large programme of research into clean coal. As far as I know, the Energy Group within the Department of Trade and Industry is responsible for research in that area, but I shall write to my noble friend and confirm that.

Lord Geddes

My Lords, the Minister has made only the most oblique of references to renewable energy, which was raised by the noble Lord, Lord Ezra, and by my noble friend Lord Trefgarne. Can the Minister expand a little on the ways in which the Government are encouraging the promotion and development of renewable energy?

Lord Sainsbury of Turville

My Lords, we have an enormous programme of research on renewable energy. The Department of Trade and Industry provides money for that. We now have the Carbon Trust programme of research and diffusion of that technology. Across government large amounts of money are being put into renewables. There may be room for debate on whether that research money is being allocated to the right areas—for example, whether enough is going on research for the hydrogen economy—but a good deal of money is certainly going into energy research.

Lord Tomlinson

My Lords, does the Minister agree that we should look not only at the supply of gas but also at demand? As noble Lords opposite have been trying to link all the Questions so far to the general election, does he not share in my surprise that they have not contemplated what would have happened to the demand for gas had the Government not had the foresight to remove VAT from it? Would there not have been a serious supply problem for many pensioners?

Lord Sainsbury of Turville

My Lords, I would not want in any way to make a political statement, but I think that my noble friend makes an excellent point.

Earl Attlee

My Lords, at some stage the issue of nuclear power will have to be considered. Can the Minister explain why it has taken more than two years for the Government to come up with their Green Paper on the disposal of nuclear waste? It is a key issue.

Lord Sainsbury of Turville

My Lords, our research into future energy supplies is extremely important. The area of nuclear waste is complicated and it is essential to get it right.

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