:00:08. > :00:16.Now on BBC News, it's time for HARDtalk.
:00:17. > :00:21.I'm Sarah Montague. The British Government is going all out for
:00:22. > :00:24.sale. These are the woes of the Prime Minister about his plans to
:00:25. > :00:31.allow companies to extract shale gas from deep underground. It is a
:00:32. > :00:35.contrast to most European countries. Many of banned it until there are
:00:36. > :00:45.convinced it can be done safely without damaging water supply. My
:00:46. > :00:46.guest is Ed Davey. If you want clean, green and affordable energy,
:00:47. > :01:20.what role should fracking have? Ed Davey, welcome to HARDtalk. Do
:01:21. > :01:26.you want a fracking being in the UK as seen in the US? It would be good
:01:27. > :01:33.for the UK if we can, called for energy security, jobs, growth,
:01:34. > :01:39.revenue for the Exchequer. We will use a lot of gas over the next few
:01:40. > :01:44.decades. Even as we decarbonise and take fossil fuels out the economy.
:01:45. > :01:50.Gas will be a critical part of the mix as well as nuclear and UK Carbon
:01:51. > :01:56.Capture and Storage. We will the gas come from? We have a North Sea gas
:01:57. > :02:01.firm for many decades. The production is still there. But it is
:02:02. > :02:06.going down. We have to import more gas from the other side of the
:02:07. > :02:11.world. To have gas in the UK is beneficial for our energy security.
:02:12. > :02:22.That is why we should do this. In the words of Michael Fallon, 20 to
:02:23. > :02:24.40 kilojoules in the next year? We have a framework to create
:02:25. > :02:27.incentives to make sure we have tough regulations on the
:02:28. > :02:34.environment. I spend a lot of time since I became Secretary of State to
:02:35. > :02:39.make sure the issues are dealt with so we can reassure communities we
:02:40. > :02:44.have taken the issues, from water pollution to water sustainability to
:02:45. > :02:48.carbon emissions and methane emissions, we take them seriously
:02:49. > :02:54.with controls in place. We now have them in place. We are creating a
:02:55. > :03:01.faint -- says framework. This for companies to start drilling with
:03:02. > :03:06.safety permits. In the US, VX gas is cheaper. They have a manufacturing
:03:07. > :03:13.renaissance. They are making things again. They are self-sufficient in
:03:14. > :03:20.gas. Can you see that here? It will not be a repeat of North America.
:03:21. > :03:26.But the volume of shale gas will be at the peak. It will not completely
:03:27. > :03:31.copy of America because of the sheer numbers involved. But it is still
:03:32. > :03:38.beneficial. It still means we have to take these issues of industrial
:03:39. > :03:43.competitiveness seriously. In Britain and Europe, the shale gas a
:03:44. > :03:50.fact in America is a real challenge to European industry, the British
:03:51. > :03:56.industry. That is because it has brought the cost of energy down.
:03:57. > :04:02.Will that happen here? It is not going to and less we see European
:04:03. > :04:07.wide production of shale gas on a scale that Britain itself cannot do.
:04:08. > :04:12.Let me give you an example. When we had North Sea gas at its height, in
:04:13. > :04:18.the European gas market, it can impact the price. We had any
:04:19. > :04:25.security. We had secure supplies of gas, jobs, growth and tax revenue.
:04:26. > :04:35.Shale gas, like North Sea gas, is a boom to energy policies. It can
:04:36. > :04:44.bring lower energy bills. Is shale gas takes off across Europe and we
:04:45. > :04:47.have the volumes as in America, this will -- there will be downward
:04:48. > :04:52.pressure. We have a challenge. We shouldn't just think that British
:04:53. > :04:57.and European production will enable us to copy the American experiments.
:04:58. > :05:09.It is deeper to energy policy. We have to look at the single energy
:05:10. > :05:19.market, RND. User is Europe -- you say is you get into shale gas, is
:05:20. > :05:27.not there is no way. The Dutch and Bulgarians and Czech Republic and
:05:28. > :05:33.Luxembourg have abandoned it. And making sure the does not regulate
:05:34. > :05:41.unnecessarily the industry and stop us going. -- the EU. If you can do
:05:42. > :05:49.it in a sustainable way, other EU states will say we were wrong to ban
:05:50. > :05:55.it. At the moment, were they at those regulations that are to
:05:56. > :06:00.restrict on the UK? There is a whole set of directives on mining, water,
:06:01. > :06:08.in missions that can apply to the shale gas industry. I have been
:06:09. > :06:17.arguing that we need guidance. There is existing directives that can be
:06:18. > :06:23.applied. They can apply. They are all already. You do not want to tie
:06:24. > :06:29.the ones? Exactly. The laws are already there. We have a strict
:06:30. > :06:34.regime already. You are talking about shale gas. Jan Costa said a
:06:35. > :06:40.recent report -- report showed that it cannot be done cleanly and
:06:41. > :06:50.safely. Same with the typically Prime Minister in Germany. Their not
:06:51. > :06:55.satisfied. Same with France. I would contest the evidence. We have public
:06:56. > :07:00.health England evidence. They said there was a problem. I asked my
:07:01. > :07:03.chief scientist, David Mackay, to ensure we looked to the environment
:07:04. > :07:11.all issues in terms of mission emissions and carbon emissions. --
:07:12. > :07:17.methane emissions. Could we ensure their were no other in the issues. I
:07:18. > :07:23.have been reassured. Guess what? We published the information. Lib Dems
:07:24. > :07:28.published a paper last July that said there had been significant
:07:29. > :07:33.local environmental damage in the US and pollution of water tables. We
:07:34. > :07:43.support a fracking of jail if we learn the lessons from America and
:07:44. > :07:51.we have done that. We have learned from lessons where there were
:07:52. > :07:54.problems. That our problems. There are concerns of treating methane
:07:55. > :07:59.emissions. The Americans are onto this. We have to make sure that in
:08:00. > :08:04.exploring and producing shale gas, but we do not let methane into the
:08:05. > :08:11.atmosphere. It is a dangerous greenhouse gas. Duke University in
:08:12. > :08:19.North Carolina is compiling a data pace. There is a higher
:08:20. > :08:26.concentration of methane in well drinking water Wells in you were gas
:08:27. > :08:32.is being extracted. We have done our research. The Environment Agency and
:08:33. > :08:39.others have looked into this. We will continue to do that of course.
:08:40. > :08:45.That is right. Is there a problem with methane in drinking water? I
:08:46. > :08:50.have seen no evidence with that. The issue we were looking at which could
:08:51. > :08:56.be a problem is not regulated properly is methane emissions. As
:08:57. > :09:01.you drill the Wells and extract the gas, this happens in a conventional
:09:02. > :09:06.oil, not just in conventional shale gas, there is always methane
:09:07. > :09:12.emissions. We regulate the industry tightly in this country. It is
:09:13. > :09:16.called fugitive emissions. The way that you take sure all the different
:09:17. > :09:22.apparatus in your ribs is properly isolated to make sure that methane
:09:23. > :09:26.does not escape. We do that already. What we were doing was making sure
:09:27. > :09:37.that applies to the new technologies being used for hydraulic fracking.
:09:38. > :09:40.The University found that the concentrations are in drinking water
:09:41. > :09:44.Wells. But concentrations were substantially higher, closer to
:09:45. > :09:54.natural gas wells. 17 times higher than shallow wells. Yet, you are not
:09:55. > :09:58.aware of the problem. The issue would be whether or not it was the
:09:59. > :10:02.drilling that was creating the concentration or the fact that water
:10:03. > :10:13.was near the gas in the first place. In the UK... 17 times? In the UK, we
:10:14. > :10:18.have strict regime is about Wells, a system they do have in America of
:10:19. > :10:23.independent will examine is to make sure the Wells we drill have to make
:10:24. > :10:27.skins and are properly examined independently to make sure there can
:10:28. > :10:34.be no leaks. We looked at the details. We have been reassured.
:10:35. > :10:40.People are not. The polls have been done. The protesters at the sides,
:10:41. > :10:46.in Sussex and Barton Moss and Manchester, or a recent opinion poll
:10:47. > :10:53.of the sedition of Mecca -- mechanical engineers, they do not
:10:54. > :11:00.want it neither homes. We have to reassure people. We have robust
:11:01. > :11:06.regulation that we have taken into account all of the environmental
:11:07. > :11:12.issues. You have to bribe them? That seems to be done. 100% for local
:11:13. > :11:19.authorities, rather than 50%. I am sorry. I do not accept your analogy.
:11:20. > :11:25.If you look at what we have done with other types of energy, whether
:11:26. > 0:04:28renewable or nuclear, it is normal to have community benefits to
0:04:29 > 0:04:28renewable or nuclear, it is normal these technologies in their areas.
0:04:29 > 0:04:28It is not special, or favours. It is right that people living locally get
0:04:29 > 0:04:28the benefits. We have a different system. Some companies are offering
0:04:29 > 0:04:28100,000 to local communities and 1% of revenues in the future. Some
0:04:29 > 0:04:28local government said, should we can't them? It is 10% profit rather
0:04:29 > 0:04:28than 1% of revenue. So 1% of revenue is a good deal and they shall take
0:04:29 > 0:04:28it? We think it is attractive. People need to stand back. This is
0:04:29 > 0:04:28good for the country with good jobs and revenue. It will help out energy
0:04:29 > 0:04:28security. As long as it is environmentally safe and the
0:04:29 > 0:04:28community can benefit, surely that is good. As long as it is
0:04:29 > 0:04:28environmentally safe. Ed Davey says there is an way of doing this which
0:04:29 > 0:04:28is safe, which you will not need to worry about what water you are
0:04:29 > 0:04:28giving your family. There was a report done by my predecessor on
0:04:29 > 0:04:28seismic activity being detected in some drilling. Not only did I
0:04:29 > 0:04:28publish the report but there was a Royal Society 's report. We put into
0:04:29 > 0:04:28place a tough regime for seismic activity. A green amber red light
0:04:29 > 0:04:28system. As well as pre- drilling checking. The way we went about this
0:04:29 > 0:04:28is to make sure the public... All of your tests... We have been doing
0:04:29 > 0:04:28that throughout the process. That Smith on. You gave the go-ahead for
0:04:29 > 0:04:28a power plant. The liberal Democrats said we would reject a new power
0:04:29 > 0:04:28station. Why did you change your mind? We had an agreement at the
0:04:29 > 0:04:28start of the Government. We look at all aspects of energy and policy. On
0:04:29 > 0:04:28nuclear, as long as there was no public substance, we would go ahead
0:04:29 > 0:04:28with nuclear. I have changed my mind on nuclear force to make main
0:04:29 > 0:04:28reasons. The party has changed its position at a conference. The first
0:04:29 > 0:04:28is climate change. The threat of climate change is the biggest
0:04:29 > 0:04:28environmental challenge to our world, probably ever. Any low carbon
0:04:29 > 0:04:28technology, whether wind, solar, tidal, uniquely, it would be
0:04:29 > 0:04:28irresponsible to take that off the table. I have been engaged in a very
0:04:29 > 0:04:28detailed examination of the cost of nuclear, looking at issues,
0:04:29 > 0:04:28comparing it with wholesome market prices and the cost of carbon and it
0:04:29 > 0:04:28seems to me that nuclear can be competitive. If we put it at a low
0:04:29 > 0:04:28carbon market in the UK, holding the world's first electricity market, it
0:04:29 > 0:04:28has to compete with renewables and carbon capture storage... We should
0:04:29 > 0:04:28explain that you have said that he had changed your mind and you
0:04:29 > 0:04:28certainly have because a few years ago you said that nuclear power
0:04:29 > 0:04:28stations would cost consumers tens of billions of pounds in addition to
0:04:29 > 0:04:28personal safety and environmental risk. It would only be possible with
0:04:29 > 0:04:28average market or subsidies. You have given a guarantee those
0:04:29 > 0:04:28companies were building this, the French company and the Chinese that
0:04:29 > 0:04:28you will guarantee a price for energy from that plant for 35
0:04:29 > 0:04:28years, a price that is double the wholesale price. If you look at what
0:04:29 > 0:04:28we are doing with the reforms in the electricity market, we have looked
0:04:29 > 0:04:28for low carbon storages. We want a market we have revenue certainty,
0:04:29 > 0:04:28you son a contract which gives you revenue certainty so you can have
0:04:29 > 0:04:28certainty and the costs are low. That is the way we are moving from
0:04:29 > 0:04:28the existing market... At double the existing price was to mark if you
0:04:29 > 0:04:28look at the wholesale price, most people expect and accept that over
0:04:29 > 0:04:28the next decade or two decades, the wholesale price of energy is likely
0:04:29 > 0:04:28to increase but more of it than that, the price of carbon is likely
0:04:29 > 0:04:28to go up, needs to go up, if we are going to tackle climate change.
0:04:29 > 0:04:28Comparing these prices, it is important you compare apples with
0:04:29 > 0:04:28apples. So when the owner of the company says, nobody in
0:04:29 > 0:04:28manufacturing is Cogin go near that price, you to say, they have to
0:04:29 > 0:04:28because that is what the market is going to be like ? Yes. If you look
0:04:29 > 0:04:28at the nuclear deal, we don't explain electricity to be generated
0:04:29 > 0:04:28from any points of the power station that we are working on with EDF
0:04:29 > 0:04:28until 2023. That honour is talking about the electricity markets and
0:04:29 > 0:04:282023, what will happen to carbon prices I bet here. That he is just a
0:04:29 > 0:04:28deal for nuclear power with France where he has than half of that price
0:04:29 > 0:04:28that you have said, ?92 50. If he wants to supply the UK, he is
0:04:29 > 0:04:28welcome. He can compete. I don't believe he will be able to. If you
0:04:29 > 0:04:28look at what people said when we did the steel, they were surprised with
0:04:29 > 0:04:28got such a low price. Except look at what the European Commission said.
0:04:29 > 0:04:28They are investigating it. I expect them to. That investigation is
0:04:29 > 0:04:28whether the plans to subsidise the construction and operation of the
0:04:29 > 0:04:28plant, and they make the point that total public support for the project
0:04:29 > 0:04:28could reach 17 billion. The costs ?16 billion to build. It could have
0:04:29 > 0:04:28been cheaper for the government to build the plant. I don't accept
0:04:29 > 0:04:28that. We were expecting that the European Commission would take that
0:04:29 > 0:04:28investigation. That is what happens with any issue where there are
0:04:29 > 0:04:28issues that need to be looked at by them. The whole electricity market
0:04:29 > 0:04:28reform has to difference. Any is to be looked at. But they concern is
0:04:29 > 0:04:28that it is a subsidy and you say it shouldn't happen without public
0:04:29 > 0:04:28subsidy but it is a subsidy. It isn't. Let me explain. You look
0:04:29 > 0:04:28at the state aid is it is about how the system is being brought to the
0:04:29 > 0:04:28market. They are bringing World carbon to the market through
0:04:29 > 0:04:28electricity market reform through contracts for difference. They are
0:04:29 > 0:04:28the same for all the carbon technologies. All low carbon
0:04:29 > 0:04:28technologies are being treated the same. A predecessor gave a statement
0:04:29 > 0:04:28to parliament about our approach to nuclear in October 2010. He made it
0:04:29 > 0:04:28clear that I have delivered on that. They will be no special favours for
0:04:29 > 0:04:28nuclear compared to other low-cut and technologies. When they look at
0:04:29 > 0:04:28the case were nuclear and look at the case for contracts for different
0:04:29 > 0:04:28renewables they will seek that that is the approach we delivered on.
0:04:29 > 0:04:28So you make the state that for the next 35 years this price it will be
0:04:29 > 0:04:28guaranteed is ?92 50. I wonder how you... It is proper gun to be ?89 if
0:04:29 > 0:04:28they go with... Am thinking about the consumer when they are paying
0:04:29 > 0:04:28energy bills. What can you do to protect them it energy prices are
0:04:29 > 0:04:28going Nattai? They will be paid. We need to look at the world up to 2023
0:04:29 > 0:04:28and beyond. Most people are looking at that scene that energy prices
0:04:29 > 0:04:28will go up and carbon pricing because of a net change, that means
0:04:29 > 0:04:28we will be looking at a slightly different world. But will it be
0:04:29 > 0:04:28doubled by the time we get to than? I don't expect that because there is
0:04:29 > 0:04:28a difference between prices and will. One of the key things that we
0:04:29 > 0:04:28are doing in this country is energy efficiency before households and for
0:04:29 > 0:04:28businesses. If you use less energy, your bill is going down, even at the
0:04:29 > 0:04:28price has gone up. So why, at the end of last year, did you remove one
0:04:29 > 0:04:28of the most significant thing is that this government was doing which
0:04:29 > 0:04:28was the energy companies because obligations. We didn't remove it.
0:04:29 > 0:04:28What happened was that we were a part of it. One of the three
0:04:29 > 0:04:28components were reduced by one third. There is a myth being
0:04:29 > 0:04:28perpetrated that we had somehow slashed energy efficiency activity
0:04:29 > 0:04:28but it is quite the contrary. Let me finish. Not only are we keeping
0:04:29 > 0:04:28property elements and rolling for two more years, at the same rate,
0:04:29 > 0:04:28with a good energy efficiency for people who are poor. The other
0:04:29 > 0:04:28element, the carbon emission element that is going forward for another
0:04:29 > 0:04:28two years at the third-rate. I must get this point and because it is
0:04:29 > 0:04:28important. ?540 million of extra public money for energy efficiency
0:04:29 > 0:04:28so we are taking energy efficiency... Why is the expert
0:04:29 > 0:04:28chair the energy efficiency to plummet office within your own
0:04:29 > 0:04:28departments, Peter, what is his energy efficiency is the one part of
0:04:29 > 0:04:28the policy that can really cut bills in the future. He said we have
0:04:29 > 0:04:28policies that are among the best in the world which we are unfortunately
0:04:29 > 0:04:28watering down. I haven't spoken to him about why he made that statement
0:04:29 > 0:04:28but I find that it showed him that not only have we keeping a lot of
0:04:29 > 0:04:28the eco- forward full to my years at rates that we were already doing
0:04:29 > 0:04:28which is really good news for the energy efficiency industry, but we
0:04:29 > 0:04:28have ?540 million of new money. At two that the fact that I put into
0:04:29 > 0:04:28the energy act of 2013 the first ever market incentive for investing
0:04:29 > 0:04:28not a new capacity, it demand reduction, permanent demand
0:04:29 > 0:04:28reduction which is a long-term boost. I am proud we have the most
0:04:29 > 0:04:28ambitious energy efficiency policies and the whole world.
0:04:29 > 0:04:28What is that like government last year when you and the government
0:04:29 > 0:04:28were under pressure because the Labour party had, with this idea to
0:04:29 > 0:04:28freeze energy prices for several months and the public seemed to like
0:04:29 > 0:04:28it and then suddenly this is pulled out of the hat. He were, the Liberal
0:04:29 > 0:04:28Democratic in charge of climate change and energy in a Conservative
0:04:29 > 0:04:28government. I just wonder how difficult those couple of months
0:04:29 > 0:04:28were. It is not a Conservative government. The Liberal Democrats
0:04:29 > 0:04:28have delivered on some many policies whether it is taking the low paid
0:04:29 > 0:04:28out attacks allowance... You honestly say that they delivered on
0:04:29 > 0:04:28green policies consumer yes. We have a green investment bank, the world
0:04:29 > 0:04:28's first ever low carbon market. This is the greenest government at
0:04:29 > 0:04:28the foreshore. -- for sure. Basically, I think Ed Miliband of
0:04:29 > 0:04:28the Labour Party has made the most irresponsible statement on energy
0:04:29 > 0:04:28policy and bills probably ever from an opposition. Ed Miliband ought to
0:04:29 > 0:04:28know that a community used to do my job. Yes, he has made a running on
0:04:29 > 0:04:28that for a little while because he tapped into a concern that I share.
0:04:29 > 0:04:28People are facing high energy costs and the question is, his solution
0:04:29 > 0:04:28will make it worse. So after the next election, if the polls suggest
0:04:29 > 0:04:28there should be a Liberal Democrat Labor Government and you are in a
0:04:29 > 0:04:28position we say, actually, withered like and our energy and I'm a
0:04:29 > 0:04:28changed secretary, will you say, not that policy you will have me. I can
0:04:29 > 0:04:28support the policy because it is a con. The first of all, people 's
0:04:29 > 0:04:28bills will go up. We already see energy bills going up. After the
0:04:29 > 0:04:28freeze, or is ever to be implemented, energy bills would go
0:04:29 > 0:04:28up as energy companies pay and regain their profits. It is a con in
0:04:29 > 0:04:28the first place. It doesn't do what it says it is going to do. With the
0:04:29 > 0:04:28Netcom it undermines competition. One of the problem is that Labour
0:04:29 > 0:04:28has and Ed Miliband needs to face, they have the big six. When we came
0:04:29 > 0:04:28into power we deregulated the competition. There are now 15
0:04:29 > 0:04:28companies competing with the big six. Ed Miliband, himself, switched
0:04:29 > 0:04:28to one of those, and guess what? The boss of the company he switched to
0:04:29 > 0:04:28service that Labour's energy price freeze it will feed into the hands
0:04:29 > 0:04:28of competition. We will leave it there. Thank you.
0:04:29 > 0:04:29Fault and frost have not much of a look in. --