Tony Lodge is a Research Fellow at the Centre for Policy Studies and is author of Step off the Gas: Why over-dependence on gas is bad for the UK, which is published today by the CPS and is available to download here.
Russia’s disruption of gas supplies to Europe risks becoming a fixture of the festive season. The Christmas spat with Ukraine, through which 80% of Russian gas exports to the EU flows, highlights the stark precariousness of over-relying on one type of imported energy, particularly gas. Britain gets 16% of its gas indirectly from Russia.
These disputes are a timely warning shot across the bows of energy planners and politicians who have, for more than a decade, allowed us to become over-dependent on gas for the generation of our electricity. I first warned about this on ConservativeHome in 2007. Further detailed research has allowed me to lay bare the precariousness of this issue.
Through error and complacency those responsible for Britain’s energy policy have allowed our country to drift into a dangerous over-dependence, with the certain prospect of dependency increasing much further in the near future. Twenty five years ago around 1% of our electricity involved the burning of gas. Now the figure is 43%. This is set to grow substantially as older coal and nuclear stations are retired and as replacements, such as the new clean coal plant at Kingsnorth, are repeatedly delayed. Gas looks set to generate 70% of our electricity by 2020 and 80% to 90% of this gas will need to be imported.
Britain started building large gas-fired power stations in the early
1990s as a cheaper and less volatile alternative to a previously
troubled over-reliance on coal. These gas stations, initially supplied
by the vast reserves from the North Sea, allowed Britain to enjoy a
more diverse energy mix and enjoy relatively cheap prices in the short
However, seventeen years later, half of Britain’s gas is imported. This
figure is expected to rise to 80% by 2020 as the North Sea is
rapidly exhausted but, ironically, Britain’s thirst for gas will
increase. Over the past 11 years the Government has only approved
gas-fired power stations for construction. No other conventional power
plant has been given the green light, thus exacerbating this gas
over-dependency. More worrying is that of the 20GW of present ongoing
UK power station build, 90% is gas-fired.
To secure this gas, Britain will have to pay top price. We are at the
end of the supply lines from Russia and on the coldest days, as we have
discovered, very small volumes reach us as other customers get in
first. This is not helped by the low level of UK gas storage capacity,
at only 15 days, compared with Germany’s 122 days. But, importantly,
France relies on nuclear stations to generate around 80% of her
electricity so is in no way comparably exposed to gas interruptions or
Britain can buy more gas from Norway, but more pipelines are being
built to send more Norwegian gas to our neighbours. And we can
contract to buy more liquefied natural gas (LNG) when our terminals are
ready, but again, as we have discovered, LNG (frozen gas) cargoes can
easily be diverted on the high seas to the highest bidder.
Gas prices are tied to oil prices and will remain volatile. They will
rise again. Electricity generated from gas is more expensive than coal
generation; consequently this increasingly over-reliance on gas has
helped push fuel poverty figures to nearly six million households, a
quarter of the total. Labour’s pledge to eradicate fuel poverty by
2010 has been totally undermined and discredited by its own energy
policy. Fuel poverty and energy policy are intrinsically linked.
The new Energy Secretary, Ed Miliband, has indicated the Kingsnorth
decision won’t be taken until the late summer, at the earliest. The
local Conservative-controlled Medway council approved the plant over a
year ago, but still the Government dithers. E.ON has pledged that the
plant would be fitted with carbon capture and storage technology when
this kit is ready.
Thirty years ago we were nearly 80% dependent on coal for electricity. This over-dependence on one fuel led to well-documented and prolonged
problems which we eventually had to face down at huge cost. Have we
not learnt the lessons of the past?
Conservatives must highlight the drift and lack of direction of 11
years of Labour’s so-called energy policy and pledge to diversify and
strengthen our supplies for the future. It is likely that a future
Conservative Government will face these problems; it must explain its
solution to this looming crisis and effectively expose Labour’s
mismanagement in this crucial area.