HL Deb 07 June 2004 vol 662 cc6-9

2.49 p.m.

Lord Ezra asked Her Majesty's Government:

What is their response to recent uncertainty in the oil market.

Lord Triesman

My Lords, oil is traded in international markets, and it is not for the Government to intervene directly. However, I repeat the sentiments of the statement made by the Finance Ministers in the Group of Seven on 23 May, in saying that we welcome recent announcements by some oil producers to increase production and call on oil producers to provide adequate supplies, to ensure that world oil prices return to levels consistent with lasting global economic prosperity and stability, particularly in the poorest developing countries.

Lord Ezra

My Lords, I thank the noble Lord for that reply. However, would he agree that, in addition to short-term measures intended to increase supply to take the pressure off current oil prices, there should be an intensification of longer-term measures to reduce the demand for oil, especially in the road transport sector?

Would he further agree that such measures should include: the rapid introduction of biofuels; the encouragement of the use of hybrid vehicles, which cut petrol consumption by half; and the wider application of fuel cells to buses, as at the moment only two vehicles use them? Is there not a case for a targeted strategy to reduce oil consumption, to run in parallel with the targeted strategy for increasing renewables?

Lord Triesman

My Lords, the Government are fully committed to increasing the diversity of energy supplies. The key commitment in last year's energy White Paper is to reduce carbon dioxide emissions by about 60 per cent by 2050. We are giving priority to encouraging renewables and energy efficiency. We directly support the use of more environmentally friendly fuels through reduced fuel duty rates, and the Government further encourage the use of cleaner vehicles through reduced vehicle excise duty rates based on vehicle emissions.

The Government want the United Kingdom to lead the shift to low-carbon automotive economies, and to be a good place in which to develop, research and manufacture them. Hybrid vehicles are supported by the Government's Powershift programme, in which grants have been offered of £700 towards the purchase of those vehicles. We encourage buses that use dual supply in the same way. The targeted strategy to increase the number of fuel-efficient vehicles in the UK exists through those plans, copies of which are available in the Library.

Lord Corbett of Castle Vale

My Lords, does not the current speculation about the future price of oil—that is what it is—underline the wisdom in the Government's energy White Paper of making the maximum use of alternative and sustainable energy and, if possible, of trying to ensure that those targets are seen as a minimum, not a maximum? That is the way to guarantee the safety of our energy supplies.

Lord Triesman

My Lords, I wholly agree with my noble friend. There are limits to what the Government can do by way of interposing ourselves in any kind of market arrangement. However, we most certainly can look at the future in the most serious way through some of the alternatives now being developed, not least as a result of the high quality of United Kingdom science and technology, so that we can drive to a point where we are not held hostage by oil prices.

Lord Marlesford

My Lords, in light of the deeply deflationary impact of hikes in the oil price, how much longer will it be before the Government review their allegedly neutral, and in practice hostile, attitude to nuclear power?

Lord Triesman

My Lords, I feel as though I am revisiting a very well loved relation. The arguments have been well rehearsed in this House and I do not intend to repeat them, other than to say that the nuclear option has not been foreclosed. However, serious attention is being given to renewable sources of fuel that we believe will be environmentally friendly and will help to sustain the United Kingdom's energy requirements.

Lord Tanlaw

My Lords, how can the noble Lord say that the Government are doing everything to encourage renewables? In south-west Scotland, which is arguably the best place for wind turbines, there is a blanket objection by the Ministry of Defence to hill farmers—I have a declared interest in the matter—who wish to help the Government in their renewable energy programme. Nothing has been done and no answer has been given on the issue, which I have raised on a number of occasions.

Lord Triesman

My Lords, the issues of aircraft and radar and other signals are being actively pursued. We made it very clear during the passage of the Energy Bill in this House that there remains a desire to site a large number of successful wind farms in appropriate areas off the coast of the United Kingdom, particularly of England, Wales and Scotland. That remains the policy.

Lord Campbell of Alloway

My Lords—

Lord Tomlinson

My Lords—

Noble Lords

This side!

The Lord President of the Council (Baroness Amos)

My Lords, there is plenty of time. We can hear from our Benches and then from the Opposition Benches.

Lord Tomlinson

My Lords, although my noble friend has a sense of déjà vu in revisiting the subject, would he accept that there was a sense of déjà vu in the House about the inadequacy of the answer? It is not fully acceptable to say that the Government have not closed their mind to the nuclear option. That in itself is a negative reply. Will he give us a very clear assertion that all steps will be undertaken to maintain the existing supply and our future needs for electricity generated by nuclear power unless and until we have adequate alternatives in place? None of the options should be forgone or allowed to degrade unless and until those renewables that we all want are actually in place, not merely a wish, a dream or a hope.

Lord Triesman

My Lords, as ever, I am deeply grateful to my noble friend for providing so robust a question. I cannot add to the general point. We have not closed the door on any of the fuel sources that we believe will be required. It is not right to make a distinction of the kind that may have appealed to one or two noble Lords about the intention to drive down carbon fuels, find new forms of renewable energy, and make sure that we have not closed the doors to some technologies that have proved extremely valuable in the recent past providing an envelope within which we will meet the fuel and energy needs of the country.

Lord Campbell of Alloway

My Lords, I revert to the Question. Is not the Government's response wholly related to the question of taxation, not to the supply of oil or indeed to carbon emissions, wind farms or whatever?

Lord Triesman

No, my Lords. It could not conceivably be argued that that was the case. There is no need for panic, but the anxieties expressed by governments as diverse as those of China, India and many other countries around the world—their requirements for fuel have grown because demand in their economies is growing—cannot all be attributable to the tax regime in the United Kingdom. We all want consistent supply, because we all want a buoyant economy and stability in the world economy.

Lord Desai

My Lords, despite all the fuss, is it not true that the real price of oil is below what it was in 1973? Oil is cheaper in real terms than it was. There is no energy crisis to justify a nuclear revival.

Lord Triesman

My Lords, it is quite right that, in real terms, oil prices are still at half the levels reached in the early 1980s.

Lord Tebbit

My Lords, the oil producer knows full well that, of the pump price of petrol in this country, 75 per cent is tax and only 25 per cent is there to account for the whole cost of production, transport, refining and retailing. Does the Minister agree that, from the oil producer's point of view, it looks a bit rich for the Government to complain about him increasing his share?

Lord Triesman

My Lords, I do not think that there have been complaints. Indeed, the dialogue that has been opened between OPEC and non-OPEC nations about greater transparency in all issues of pricing has been one of the central features of contemporary negotiations about oil prices. World economic stability is as much in the interest of oil producers as it is, if I may say so, in our interest.

Lord Campbell-Savours

My Lords, is it not true that the scientific research—

Baroness Amos

My Lords, we are out of time.