Examination of Witnesses (Questions 240
- 259)
WEDNESDAY 14 DECEMBER 2005
MALCOLM WICKS
MP, MS BRONWEN
NORTHMORE, MR
BRIAN MORRIS
AND DR
GEORGE MARSH
Q240 Chairman: Which was?
Malcolm Wicks: I am happy to address
the nuclear question, but I am a bit unhappy to discuss tittle-tattle
from newspapers about one of my officials that some people want
to discuss in public.
Q241 Chairman: What we are anxious
to do whilst this charm offensive continues—
Malcolm Wicks: Your charm offensive
or mine?
Q242 Chairman: Both. We have met
the leaders of industry who are wanting decisions from the Government
as to whether carbon capture and storage is going to be a significant
technology in meeting the Government's objectives for the reduction
of CO2 by 2020 and 2050 and in order to achieve that they have
got to start developing large scale plants as soon as possible.
What we are trying to get from you today is a clear indication
as to whether the Government has that at the head of its agenda
in terms of giving business the sort of assurance it needs in
order to go ahead with large scale production.
Malcolm Wicks: Yes, and that is
the serious matter before us, but it is a very different matter
if you are inviting me to discuss the future of one of our very
well respected and experienced civil servants who, in the normal
course of events, after four years of doing an excellent job,
is now moving on. These two things bear no relationship at all
to one another.
Q243 Chairman: I thought you would
have wanted to put on the record whether her departure was because
of the tittle-tattle in the media or whether it was because you
had had a change of direction.
Malcolm Wicks: The tittle-tattle
in the media was about her departure. The causal relationship
is very clear to me here.
Q244 Chairman: Minister, we will
move on. There is no point in continuing with this.
Malcolm Wicks: I did not start
it. What I have said is that we are very interested in carbon
capture and storage. It features in budgetary reports and in speeches
by Ministers. We are investing some money in carbon abatement
and carbon sequestration. We have discussed it with OPEC. It is
there in our presidency of the EU and the G8. I think it has huge
potential. For anyone, including the Energy Minister, to predict
precisely where we will be by 2015 I would judge at the moment,
given the science and the technology and the lack of demonstration
projects, to be slightly foolish.
Q245 Dr Harris: Has the Prime Minister
given a speech on carbon capture and storage or mentioned it?
Malcolm Wicks: I would have to
check the record on that. I was alluding to the fact that this
Prime Minister has helped lead the world debate on the climate
change challenge. I am happy to check the record to see whether
he has mentioned CCS or not.
Q246 Dr Harris: I think I have heard
him talk about nuclear. I thought you might know whether he had
promoted carbon capture and storage to give the newspapers something
meaty to write about in the energy debate.
Malcolm Wicks: I am happy to discuss
the mass media all morning. This seems to be of interest to the
Committee. The serious issue on energy policy is that the Prime
Minister has established a major review of energy policy, which
I lead, it reports to him and my Secretary of State and carbon
capture and storage and other technologies are very much at the
heart of that review and that shows the Prime Minister's commitment
to this area.
Q247 Dr Harris: People out there
see that to a certain extent there is competition for resources
and investment between nuclear, carbon abatement in terms of carbon
capture and storage, between investment in renewables and new
renewables and energy efficiency. If they only hear the Prime
Minister speaking and promoting the nuclear agenda, which I make
no judgment about, then people fear that there may not be as much
concentration on those other technologies and what people think
and fear is important because we are trying to attract investment.
I was giving you an opportunity to stress how you feel as Energy
Minister about the balance between those four areas.
Malcolm Wicks: In the Energy Review
we have to ask some serious questions about energy supply. I am
aware, as Energy Minister since May, that this is an area which
attracts enthusiasts. There will be people saying to me, "Here
is the one solution. This is the only thing you should think about,"
a silver bullet, maybe sometimes a uranium bullet, but the fact
of the matter is that when you look at this intelligently and
seriously, there may be a contribution from one source which adds
up to 10% or 20% and renewables have got to play a role and energy
efficiency within that is crucial. We have got to look at whether
we are relaxed about a heavy reliance on gas imports in the future,
we have got to look at the future of coal, we have got to look
at a range of things and within that we have to make judgments
about civil nuclear which at the moment contributes about 20%
of our electricity but it does not contribute 100%. The judgment
in the review and the judgment for Government is how we build
up sources of energy supply and that will not satisfy all the
enthusiasts. My own judgment is that renewables has a very major
role to play. I think we have got to push the boundaries of energy
efficiency far more seriously. You cannot talk about energy policy
any longer without talking about the environmental agenda, they
have got to go absolutely closely together and therefore we have
got to look seriously at these technologies, be they nuclear or
carbon sequestration.
Q248 Dr Harris: You have already
referred to the gas fired large scale pilot projects associated
with BP in the Miller field. Is the DTI or are you prepared to
sponsor or to encourage an equally large scale pilot based on
coal firing given the relationship that you propose to develop
with China and China's massive expansion of coal fired power?
If we had a truly commercial scale coal fired plant would that
not put us in a very strong position in developing that relationship?
Malcolm Wicks: I am interested
in looking at that. We have a sum of money for our carbon abatement
programme which was £25 million and the Chancellor has now
allocated £10 million and this is a significant resource
but, of course, it is not a huge resource. We are thinking through
now what projects we can help support with that and I think clean
coal is something that we would want to look at. You have alluded
to China. I think the great challenge in China, given the huge
development of coal plants in China, and they have been burning
huge amounts of carbon for a century or more, mainly coal, is
how we work with the Chinese Government—we being the international
community, of course, not just the UK, although we are in a special
position at the moment as we hold the presidency of the European
Union—to ensure that the coal plants in China have a technology
which means that they are "capture ready"; in other
words, that when they are built they may not have the technology
to capture carbon dioxide but are designed to enable this to be
easily fitted. I am advised that that is the technological challenge.
The UK, on behalf of the presidency of the European Union, is
about to sign a Memorandum of Understanding with China this month
for a feasibility study into carbon capture and storage being
adopted in China.
Q249 Chairman: I want to return to
that in a second. Can I just try and tie you down about why carbon
capture and storage has suddenly become a major player within
the whole mix where it was not a couple of years ago and could
I ask you about the geopolitical problems. Do you see that energy
supply, particularly gas from Russia, has actually changed the
scene or is there something else which has caused the DTI to say
that carbon capture and storage has now got to play a major role?
If it is not geopolitical considerations, what are the other considerations?
Malcolm Wicks: Why has carbon
capture and storage suddenly become prominent? I am sure there
will be those who can point to a scientific literature that says
these ideas are really quite old. In terms of key developments
in the world, I think probably they started somewhere in the mid-Nineties.
The Norwegians have actually been doing CCS for eight years or
so and indeed their evidence geologically of what happens is both
very important scientifically and reassuring. In terms of the
public policy of all this, it is a relatively new development
still globally with not many instances of it actually being practiced.
I think why we are taking this seriously now is that in its recent
era Government has brought together the climate change issues
with energy policy. We have got to look at all the feasible ways
of reducing CO2 emissions in particular. Just as this means that
you have to reopen the nuclear question and you have got to look
seriously at the wind turbines and tidal power and many other
technologies, it also means that certainly the time has come for
institutions across the world to take this one very seriously.
Politically and historically that is how I would judge it. We
all know that the climate change targets we have set ourselves
are very difficult ones to reach.
Q250 Chairman: It has changed since
2003, has it not, since the last Energy Review?
Malcolm Wicks: A number of factors
which we knew about in 2003 nevertheless have pressed ahead at
such a rate that the judgment that has been made is that we need
to review them again. In terms of the geopolitics, we have just
become a net importer of gas last year. In a few years' time we
will become a net importer of oil as the North Sea and the UK
Continental shelf reserves decline. There is still a lot there
but it is in decline. We said earlier maybe a fifth of our electricity
comes from nuclear at the moment. If nothing else is done by 2020
it will be 6% or 7%, something of that order. These two factors
alone raise questions. One scenario is that we become more and
more heavily reliant on gas imports including from, as the Prime
Minister said at the Brighton conference, some unstable parts
of the world. I cannot say it is a new dimension, Chairman, because
you have said surely we knew about this years ago and the politics
across the world have always been there, the Middle East, et cetera,
but nevertheless I think my own judgment is that the national
security dimension of energy supply has now come to the fore.
You could answer the question in different ways. We need to look
in the review at whether or not we should become more self-reliant
in the future.
Q251 Chairman: Minister, depending
on which direction the Government wants industry to take in terms
of building the next generation of power stations, be they nuclear,
be they ones with CCS, pre-combustion or post-combustion, do you
think that business is able to follow both? You have indicated
in your response to us that you see this energy mix between perhaps
nuclear and CCS as being a bit of a balance. Do you think it is
feasible that we are going to be able to follow both directions
and that businesses are going to invest in both?
Malcolm Wicks: We go into this
review nuclear neutral, genuinely we do. There are a number of
factors we need to consider and I am not at all certain at the
moment where we will be in the summer on that one, but by the
summer we will know on that nuclear question in so far as the
review team and the Government's position will be clear. Given
our climate change objectives and the need to reduce CO2 emissions,
I think there is a strong case—and I think industry would
be looking for this—for some mechanism, it could be fiscal,
it could relate to putting a price on carbon—and the Emissions
Trading Scheme in Europe is very interesting in this respect—some
mechanism that basically incentivizes industry to reduce carbon
levels. Some might say the wind turbines will do that, some might
say nuclear will do that and in that context carbon sequestration
is very important, but it may be a level playing field, a catch-all
incentive and then some would say it is up to industry and investors
to judge what are the most appropriate technologies. I am not
predicting that is what will happen but I think that is one possible
scenario.
Q252 Adam Afriyie: It seems to me
from the research we have done, we have been to power stations
and we have looked around the industry, it is absolutely clear
that the energy generation industry has a relatively clear understanding
of what the costs are for carbon capture and storage, it is quite
comfortable and ready to use the emissions trading system. What
seems to be holding it up is actually a long-term framework from
the Government on emissions trading, on the Kyoto targets and
on the price of carbon. It seems to be Government is the barrier
to industry adopting the Carbon Abatement Technology.
Malcolm Wicks: I do not want to
make a party political point because you might think I was a politician
if I did! I am proud of the fact it is my Government rather than
an earlier one that has seized the agenda on this and is pushing
it forward, and obviously there is always a sense of why cannot
we go quicker and all of that. The Climate Change Programme Review
that is led by Margaret Beckett at Defra is coming to a conclusion
and will be reporting soon. That review is looking at our climate
change targets. The Chancellor has asked Nick Stern, the Government's
Chief Economist, to look rather globally at the interface between
climate change and economic instruments and then we have got the
Energy Review and we will need to pull a lot of this together.
It is quite a tight timetable. We have to report by the summer.
A lot of people out there might be saying it would have been nice
to have had it now, but the fact of the matter is that we have
now got mechanisms in place to clarify this. One thing I have
learned, if I needed to learn it, is that in energy policy, where
we have got targets on emissions which go up to 2050 and where
we need to make judgments now which will influence energy policy
and therefore climate change maybe for much of this century, I
do not think that is putting it too far, we need long-term certainty
and industry need long-term certainty. It is one of the reasons
why as part of the review we have got to be engaging in debates
with interest groups, stakeholders, the public and other political
parties to see whether there is consensus.
Q253 Adam Afriyie: The situation
is that industry seems ready to adopt these technologies. They
are just waiting for a clear price on carbon emissions. When are
the reviews going to stop and when is a decision going to be made
so that these technologies, which do exist and which are feasible,
will be brought into play by the industry?
Malcolm Wicks: The review finishes
by the summer. I know you can always tease about reviews, but
I am not going to apologise for Government thinking hard about
a serious question.
Q254 Dr Harris: I think the question
about competition between nuclear and carbon capture that the
Chairman asked just before—
Malcolm Wicks: I do not think
it is a competition by the way.
Q255 Dr Harris: Do you think it is
possible that there can be cost-efficient investment in both options?
I will explain what I mean because this is not my field. What
is suggested is that "most of the costings for both nuclear
and gas- or coal-fired plant fitted with CCS assume that the plant
will be base-load generation plant. There is a finite demand for
base-load demand on the grid so it would probably not be possible
for both types of plant to operate as such. This means that either
CCS-fitted plant or nuclear would need to bear the additional
penalty of running at lower levels of generation, which could
impact on their commercial viability." I am trying to give
you a specific example of how there is potentially competition
for new investment between those two in that example.
Malcolm Wicks: Not one of these
technologies is going to enable us to tackle the climate change
challenge adequately. We will need a range of behavioural changes
in society in terms of energy efficiency. I go back to the silver
bullet idea. It is an easy way to present the argument but in
my judgment it is not helpful, indeed it is naive. In terms of
nuclear, if we think that that is important for the future then
we will be looking to the private sector for those investments.
This would not be a major government public spending programme.
No doubt in different areas we would need to look at the relationship
between government and the market, but we would be looking to
the market to fund new nuclear should we go down that route. In
terms of the focus today on carbon capture and storage, I think
we do recognise that for the market to invest in these technologies
there does need to be some financial incentives. I think there
is quite an interesting debate going on now. The Emissions Trading
Scheme is a very early practice across the European Union and
it puts a price on carbon. We are in a learning game here.
Q256 Dr Harris: I was trying to work
out whether you saw the point in the example I gave about whether
even the market can ride two horses, particularly when it involves
a lot of expertise and a lot of investment in new plant, both
nuclear and carbon capture, or whether it might be better to go
for one in a big way.
Malcolm Wicks: I think I have
indicated my answer. There are big decisions to be made about
nuclear. The big decision there might well contribute 20% or 30%
of the energy supply but it is not 100%. I would not go down the
French path. I think diversity is very important. I think industry
has proved already that it can ride different horses and back
different technology.
Q257 Chairman: Can we talk about
a third horse which is renewables? Do you feel that CCS is in
direct competition with renewables for government resources?
Malcolm Wicks: No, I do not.
Q258 Chairman: The argument appears
to be emerging that we have got nuclear on the one hand and we
have CCS using fossil fuels on the other and where does renewables
come into this and how are we able to sustain that development
in renewables if these two other technologies need such huge investments?
Is it possible to do all three?
Malcolm Wicks: Yes. It is not
always the Government investing in these things. We are into a
period of market liberalization. We are talking about privatised
companies in terms of energy. We are talking about the potential
for the City to invest in many of these technologies, as they
are doing already. It is not all about public expenditure.
Q259 Chairman: Let us give you a
practical example, Minister. The total reduction in CO2 which
has come from the Peterhead project would be the equivalent to
all the wind farms in Britain. Why do we not just do a bit more
of that and not bother with renewables? Is that not a good commercial
decision?
Malcolm Wicks: I think I indicated
when I was pressed by you very early on—
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