As the UK becomes increasingly dependent on imported gas, the prospect of the nation losing control of its energy supply looms ever larger. The only pragmatic alternative is to invest urgently in a mixed range of domestic fuel sources, in which nuclear, clean coal and renewable power sources each plays a significant part in the security of UK energy supply.
Recently, we have seen a dramatic rise in the price of gas, and it is likely to continue to rise over the next two years.
Longer term, gas prices may fall as further pipelines from Europe are built and the UK's liquefied natural gas (LNG) terminals are completed. However, prices still depend on demand and events elsewhere in the world - the recent crisis between Russia and the Ukraine confirmed this.
ICE backs renewable energy, but achieving the target of generating 10% of our electricity via renewables by 2010 is unlikely, given the difficulties of obtaining planning permission for onshore wind farms. Somewhere between 5% and 7% is more likely. The ICE would like to see increased funding to develop the most promising renewable technologies, particularly marine.
The market has also invested heavily in gas-powered stations over the last 15 years, but investment in new coal-fired and nuclear power has been ignored. If we are to close the large-scale generation gap, we must reverse this.
In 2004, the nuclear contribution to the UK's electricity supply was 21%. By 2013, it will fall to around 7% as power stations reach the end of their lives. A new generation of nuclear power stations would help to maintain security of our energy supply. However, given the 10 to 15 year lead time required for new nuclear power stations to come online, ICE wants to see both regulatory and planning processes streamlined for new facilities.
We would also like to see a strong UK policy to introduce more energy-from-waste plants.
Waste has the potential to produce 17% of UK electricity by 2020, and therefore this valuable resource must not be overlooked.
The ICE welcomes the government's review of UK energy policy. In particular, we urge the government to embark on a strategy that invests heavily in renewables to allow them to contribute a greater proportion to the UK's energy mix. But renewables do not have the capacity to replace coal and nuclear in the medium term.
There is a huge strategic risk in over-reliance on imported gas. Clean coal and nuclear should play a significant part in UK energy supply, which means reinvesting in new build nuclear and coal generation.