BRITAIN’S first imported cargo of liquefied natural gas for 20 years docked near London yesterday, starting a new era of greater reliance on imported gas to make up for falling output from its ageing North Sea fields. A tanker carrying the LNG from Algeria sailed into a new import terminal built at the Isle of Grain on the Thames Estuary in Kent.

Its arrival symbolised the change and upheaval in the UK energy market, driven by geological, environmental and geopolitical forces.

Fundamental questions now need to be resolved. Where will future gas supplies come from? How will we generate enough power to meet demand? How can we meet our environmental commitments? And how can we do all this and keep the price of energy affordable? As our indigenous gas resources decline, we are being forced to look overseas for supplies for our British Gas customers, at significantly higher cost than when the North Sea was producing at peak levels. Simultaneously, the global need for, and the price of, oil has risen, pulling the gas price up with it. Cheap air fares and more and more appliances in people’s homes push demand ever upwards.

There has never been a more important time to focus our minds and our wills on reducing carbon dioxide emissions. As a society we have to come to terms with the fact that the output of man-made greenhouse gases must be constrained.

Managing these conflicting forces has huge implications for the energy sector and its customers. It will mean closer convergence between energy and environmental policies — nationally and internationally.

Initiatives such as the European Emissions Trading Scheme (ETS) will become increasingly important. The ETS is driven by environmental demands but has profound implications for energy issues such as the security of supply.

On the environmental side the scheme works because it actually constrains the amount of carbon dioxide that industries across Europe can produce. And it does so cost-effectively.

But the details of the next stage of its design could determine when new investments are made in generating capacity. If new, cleaner power stations have to pay more to emit carbon dioxide than existing ones, construction will be held up. Therefore we urgently need some clarity if we are not to see delays that will be bad news for the UK’s security of supply at a critical time.

With renewable generation, the Government has established a separate market mechanism that requires all energy suppliers to secure an increasing amount of power from green sources, from 5.5 per cent now to 15.4 per cent by 2015-16.

That allows Centrica and others to invest heavily. We are putting £750 million mainly into offshore wind-farms. But again, market stability is needed if companies are to invest the amounts needed to reach government targets.

Meeting environmental objectives will be about how we use energy just as much as how we generate it. A quarter of CO2 emissions stem from household energy usage, so energy efficiency has a big role to play.

Progress is being made — more efficient appliances and better insulation. British Gas is installing thousands of high- efficiency boilers and working with customers to save them energy and money. But progress is slow and patchy. The problem is that investing in energy efficiency is a long way down most people’s priorities.

So if the Government wants energy efficiency as an end, it must create a means to get there. Tax breaks on insulation and other energy efficiency measures must be considered. And they need to be significantly more compelling than those put in place to date.

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