Gas will help cut carbon emissions and will remain a key element of the UK’s energy mix “for some time yet”, energy secretary Ed Davey told a conference today.
Mr Davey, speaking at Gastech in London, said gas was “a vital industry that’s of strategic importance to the UK” and that it had a “critical role in Britain’s energy policy”, being the single most important fuel in the UK’s energy mix.
“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,” he said.
“In electricity generation alone, I expect new gas capacity of around 20GW to be built between now and 2030.”
However, he said he was unapologetic for his “patient approach” to opening up shale gas exploration in the UK.
Drilling for shale gas resources was put on hold following concerns last year that a technique used by the industry – fracking – had caused a series of mini earthquakes off Blackpool.
It has also faced controversy and opposition in the US where shale gas has transformed the market, reducing prices due to a glut in supply.
The UK government is widely expected to give the go-ahead for shale gas exploration in the country.
However, Mr Davey sent shot across the bows of British commentators who he said had been “excitedly touting shale gas as a silver bullet to bring Britain to a new age of cheap energy”.
He said he was in favour of exploiting new resources, but said the UK’s extraction of shale gas should be based “on the evidence”.
Me Davey said in 2011, the UK was the world’s third largest LNG (liquified natural gas) importer, with volumes totalling around 25 billion cubic metres, about a quarter of our total gas consumption.
“The UK is a major consumer of gas: among the largest in Europe. Over £22billion worth of natural gas was sold in the UK last year,” he said.
“Gas provided 68% of our heating and accounted for 37% of our primary energy use.”
But he said about 20% of the UK’s existing electricity generating capacity will shut over the next 10 years, while electricity demand is projected to rise significantly, as heat and transport are increasingly electrified.
“We are likely to need something like £110billion of investment in electricity generation and transmission by 2020 – requiring a doubling of the current rate of investment,” he said.
“And some investment is needed in the short term: Britain’s power regulator, Ofgem, sent a helpful signal to the market only last week, with its electricity capacity assessment showing rapidly tightening margins in the UK within the next few years.
“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.”
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