Russia is no longer a military superpower, but its vast natural resources mean it is becoming an energy superpower. Russia’s state energy giant, Gazprom, produces 85% of the country’s natural gas and controls over 17% of the world’s reserves. The EU gets 25% of its gas from Russia and this is set to rise. Russia has a very clear strategy which is there for all to see in Georgia. It would prefer Europe’s gas to go via Russia and not via independent neighbouring states.
Recent television pictures have shown terrified Georgians fleeing the fighting but far less prominent were the carefully targeted missile strikes near the Baku-Tbilisi-Ceyhan (BTC) pipeline, one of several important pipelines that bring gas to the West. This pipeline is 30% owned by BP. It is, importantly, one of the few pipelines from the Caspian region not to cross Russian soil
Against this high game of international geopolitics is the precarious British position on energy policy. We are becoming overdependent on gas, which will increasingly be imported, for the generation of our electricity. Any potential interruption in supply, which affects the price, rightly sends shivers downs the back of politicians and energy planners. Gas supplies around the world come from a variety of sources but the really big deposits are to be found in Russia, Libya, Iran, Algeria, and Qatar. Britain’s gas import dependency will necessitate both pipelined supplies and LNG supplies from these states and others for the long term.
The Georgia crisis is an important lesson for Britain and her energy choices and it is not too late to sit up and act. Energy diversity and a need to limit or even reduce our use of gas for electricity must be seriously examined as an option. This, I believe, is one of the reasons why the proposed new 1.6 Gigawatt (GW) cleaner coal power station proposed by E.ON at Kingsnorth should be approved by the Government, but perhaps more importantly, supported by the Conservative Party. If the polls are accurate it will be David Cameron who will have responsibility for energy from 2010 and face the unpredictable results of 12 years of Labour inaction in this vital area. Conservatives are in a strong position to attack Labour’s risible record on energy policy.
Let’s look at the evidence; seven Labour Energy Ministers over 11
years, three contradictory energy White Papers, a huge increase in gas
dependence for electricity, record energy prices and nearly six million
families trapped in fuel poverty. I predict this figure will rise
alarmingly over the winter. One tragic result could be an increase in
pensioner deaths as they find it near impossible to pay gas and
electricity bills to stay warm. Electricity prices are being driven
higher by the cost of the gas used to generate it. Wholesale gas
prices have been extremely volatile in recent years, which is hardly
surprising as, around the world, its price is pegged to the oil price.
This gas dependence for electricity should be properly exposed. The
facts are clear. Since 1997 Labour has approved a staggering 12GW of
gas fired power stations. No other baseload power stations have been
encouraged or built over this period to help diversify the energy mix
Labour Ministers often emphasise. Perhaps more alarming is that today
over 90% of the 18GW of ongoing power station construction in the UK is
to be gas fired, thereby exacerbating our gas import dependency. The
Government admits that by 2020 around 80% of the gas we will need will
have to imported.
We now face a 32 GW gap by 2015 as old coal, oil and nuclear stations
are brought off-line. We must fill this looming gap with new baseload
suppliers and if we don’t wish to become yet more dependent on gas,
which I believe would be a huge mistake, then we must go for new
advanced cleaner coal power stations and of course, new nuclear
The latest Government figures show that gas now generates 43% of
Britain’s electricity. Having enjoyed a long period of plentiful
indigenous energy, UK gas production last year fell by 10% – the
seventh successive year gas output has fallen. Oil production
stabilised as a result of new fields without which output would have
been 12% lower.
We need to build alternatives to gas stations and start doing so now.
If we don’t I predict that our gas dependency for electricity
generation could reach 55% in the medium term which would bring with it
huge geopolitical, security of supply and price implications. Only
recently another large 1.2GW gas fired plant was given the go-ahead at
Seal Sands on Teeside.
Kingsnorth could be up and running by 2014 if its gets the go-ahead. It
will be 20% cleaner than the plant that it replaces. It uses what is
called supercritical technology which means it is much more efficient
and cleaner than older coal stations. Also, and more importantly, it
will also be able to retro-fit carbon and capture and storage (CCS)
technology. Encouragingly, last week the Swedish energy company
Vattenfall opened a small coal plant in Germany which will produce
almost carbon free electricity. This is an important breakthrough test
for carbon capture and storage technology. This small but important
project will produce enough electricity for a town of 20,000 people and
is intended to be used in new larger plants like Kingsnorth, when
available on a commercial and larger scale. And this week Scottish
Power unveiled plans to liquefy carbon dioxide emissions at the
country’s biggest power station to transport the waste gas for
permanent burial in the North Sea. The company has proposed converting
one of the four coal burner units at the large 2.6GW Longannet power
station in Fife to use CCS technology. Though Britain will import most
of the coal it needs in the future the main reserves of the world’s
most abundant fossil fuel are evenly globally spread and the
international price of coal remains well below gas. We should not
dismiss our own indigenous coal reserves which still provide around a
third of what we need, help keep prices down and help insulate against
any import interruptions.
Opposition to Kingsnorth, other new coal technologies such as coal
gasification and our ongoing coal plants needs to be properly weighed
against our energy priorities and predicament. If we are to succeed in
cutting global carbon emissions and plugging our looming energy gap we
must demonstrate to China and India through plants like Kingsnorth that
the technology which they should be investing in exists and we in the
UK have developed it. By supporting Kingsnorth and other cleaner coal
plants we can balance our energy portfolio, develop a unique skills
base, help gets bills down and shiver a little less when Mr Putin
decides to rattle his sabre in the future. Any further gas dependence
will put the UK on the back-foot in this new era of energy politics.