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Monday 26 June 2017
26 June 2017 - NEWS UPDATE
Renewable Energy

Davey confirms focus on gas to meet UK energy needs and hints at shale gas extraction go-ahead

Energy Secretary Ed Davey today confirmed the UK's commitment to the 2°C climate change goal, said gas would continue to play a critical role in supplying the country's energy needs for decades to come and hinted he wanted to give the go-ahead to the controversial extraction of shale gas.

He said he was taking a realistic and pragmatic approach towards gas, and aiming to make good progress at Doha Climate Change Conference next month towards achieving the objective agreed in Durban last year:  a new, legally binding agreement, applicable to all, by 2015.

But he emphasised "The gas industry of course plays a critical role in Britain's energy policy. The UK is a major consumer of gas:  among the largest in Europe.  Over £22bn worth of natural gas was sold in the UK last year, making it the single most important fuel in the UK's energy mix.  Gas provided 68% of our heating and accounted for 37% of our primary energy use."

He said he saw 'unabated' gas playing a very significant role in electricity production throughout the 2020s, and, increasingly as back-up or with carbon capture and storage, through the 2030s and 2040s.

The Energy Secretary, who was addressing delegates at the GasTech conference in London Docklands, said the UK benefits greatly from a liquid and dynamic gas market.

"Indeed, many countries are choosing to emulate our gas market, as they work towards more liberalised and flexible models.  They understand that our market facilitates trade in gas, provides diversity in gas supply, and makes it easier for the UK to access sources of gas," he said.

"We have a unique position as a gas corridor for Europe. We directly access the international LNG market here and we have great connections with the Continent.  In 2011, the UK was the world's third largest LNG importer, with volumes totalling around 25 billion cubic metres, about a quarter of our total gas consumption.

"And the UK has a long track record of gas expertise – whether that's in finding, extracting or trading gas.  We are good at gas – and we like gas."

Mr Davey insisted that the pragmatic view which should be recognised was that for now gas was helping many countries cut their carbon emissions – including Britain – and this will remain unchanged for some time to come.

But at the political level work was continuing in closing the gap to achieve the UK's 2°C goal and adopting a second commitment period to the Kyoto Protocol.

He added: "In the meantime, the UK continues to play its part.  We have set out clearly, through our Carbon Plan and Carbon Budgets, our trajectory to a low-carbon economy.  We are reducing our own emissions through energy efficiency and through low-carbon technologies such as renewables, nuclear and carbon capture and storage. Crucially, that means giving investors the certainty they need to make long term investment decisions," he said.

"That is essential, because in the UK we need our rate of investment in energy to increase substantially.  Above all, to provide the energy security our people and our businesses expect.

"Despite the good shape of Britain's gas market we cannot afford to be complacent now, or in the future when it comes to energy security.  We are working internationally to encourage investment in new gas production, supporting UK companies overseas.  We are encouraging diverse and efficient liberalised gas markets;  we are encouraging energy efficiency measures;  and we are supporting the opening of new gas supply routes to diversify and enhance the resilience of global gas markets.

"Gas will play an important role in ensuring security of supply for Britain's electricity.  Around 20% of the UK's existing electricity generating capacity will shut over the next ten years. Yet over the next twenty years, electricity demand in the UK is projected to rise significantly as heat and transport are increasingly electrified.  We are likely to need something like £110bn of investment in electricity generation and transmission by 2020 – requiring a doubling of the current rate of investment."

He told delegates that some investment is needed in the short term confirming Britain's power regulator, Ofgem, warning last week that electricity capacity in the UK would reduce rapidly within the next few years.

He said: "As we meet these energy security challenges, gas will play an important part in our diverse energy mix, not least as the cleanest-burning of hydrocarbons and arguably the most flexible.

"First of all, gas will obviously continue to be the key energy source for heat in many of our buildings in Britain, for years to come.  But in electricity generation too, I see unabated gas playing a very significant role throughout the 2020s, and, increasingly as back-up or with carbon capture and storage, through the 2030s and 2040s.

"The UK is one of the global leaders in CCS, and our £1bn fund to support the first commercial-scale demonstration of this pivotal technology is a major step forward.  CCS matters not only for the continued use of gas in the long-term in the UK;  it is also vital for cutting emissions globally.  And as we prove the commercial viability of CCS, we have the chance to create in that process an exciting export opportunity for companies that become early leaders in this technology.

"So yes:  a substantial investment in gas generation and gas import infrastructure here in the UK is completely consistent with Britain's plans to cut carbon emissions, set out in our Carbon Plan.  In electricity generation alone, I expect new gas capacity of around 20GW to be built between now and 2030."

In conclusion, the Energy Secretary also said that questions of proper regulatory oversight and the involvement of local communities need to be answered before the go-ahead would be given about the controversial extraction of hale gas.

But he hinted: "In the context of the Government's green light for CCS for fossil fuel plants and in the light of evidence of the best regulatory regime, I hope it will prove possible for me to give a green light to shale."

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