'The lights won't go out' but Labour is looking at all energy options - including the 'N' word

Trade Secretary Alan Johnson explains how he plans to keep Britain safe from power crises, as nuclear energy takes centre stage
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The Independent Online

In his speech to the Labour Party conference, the Prime Minister announced a review of energy policy that will examine how we can both reduce greenhouse gas emissions and ensure enough affordable energy to meet our growing needs.

To date, the UK market has been pretty good at doing both. Greenhouse gas emissions are down 12.5 per cent since 1990 and we have a balanced portfolio of generation including coal, gas, renewables and nuclear energy. The lights have always stayed on and our prices have been among the lowest in Europe.

But energy around the world is changing and we need to adapt. Hurricane Katrina has hit world oil supplies and crude prices have hit record levels. This has increased the cost of other fuels used to generate electricity, and consumers are now feeling the effects.

The UK, once a net exporter of gas, last year became a net importer again. Our ageing nuclear reactors, which currently generate a fifth of our electricity, are set to be decommissioned over the next 30 years.

In the last energy White Paper we started to prepare for these changes by increasing our investment in renewables and measures to encourage energy efficiency. Last year, as a result, we saw the largest-ever rise in renewable generation in the UK, and by 2020 we expect a fifth of our energy to be from those sources.

But we will still rely on fossil fuels and will need to look elsewhere to ensure supplies. We are already importing gas directly from Norway, in addition to liquefied natural gas coming from the Middle East. And tomorrow I'm meeting with my Russian counterpart, Victor Khristenko, in the first EU-Russia Permanent Partnership Council on Energy. It will be a historic meeting and we hope for agreed action on energy efficiency, infrastructure, investment and trade.

Russia's energy reserves are vast, with around 30 per cent of world gas reserves. It is already by far the biggest supplier to the EU - half of all gas and a third of all oil imported - and it is clear it is key to obtaining secure supplies for the future.

But, as the Prime Minister made clear, we must do more to ensure secure and sustainable energy. That's why we need to look at other technologies, from capturing the carbon emitted from fossil-fuel generation and storing it underground, to emerging renewable technologies such as offshore wind, wave and tidal power - and, yes, nuclear power as well.

Nuclear reactors generates electricity without producing carbon emissions. We need to have a hard- headed look at the latest nuclear technology to see if the issues around cost and waste make it a viable and acceptable form of generation compared to other options.

However, we must also focus on this coming winter. Gas supplies are tighter than in previous years because production from the North Sea has declined more quickly than anyone thought. Some translate this into concern that the lights will go out. They will not.

If there is an extremely severe winter and demand increases, some major industrial energy users may decide that it is commercially preferable to use less energy, or even sell contracted supplies back to the market. Domestic customers will not be affected.

But any squeeze will be short- lived. A new liquefied natural gas terminal in the Thames Estuary is already up and running and an upgrade to the existing pipeline from Belgium, doubling its capacity, is due to be ready by November, a month early.

Longer term, major new gas import and storage facilities are on the horizon to ease the supply and price situation, including new pipelines from Norway and the Netherlands and two more liquefied natural gas terminals in Pembrokeshire.

The final aspect of energy policy, which is vital both this winter and in the longer term, is helping those who struggle to heat their homes. We have already lifted three million households out of fuel poverty, but in this and future winters we need to do even more.

The energy review will therefore have at its heart our commitment to ensuring our energy supplies are affordable as well as secure and sustainable.

Alan Johnson is the Secretary of State for Trade and Industry

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