UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 578-iii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

SCIENCE AND TECHNOLOGY C0MMITTEE

 

 

CARBON CAPTURE AND STORAGE TECHNOLOGY

 

 

Wednesday 14 December 2005

MALCOLM WICKS MP, MS BRONWEN NORTHMORE, MR BRIAN MORRIS

and MR GEORGE MARSH

Evidence heard in Public Questions 232 - 359

 

 

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Oral Evidence

Taken before the Science and Technology Committee

on Wednesday 14 December 2005

Members present

Mr Phil Willis, in the Chair

Adam Afriyie

Mr Robert Flello

Dr Evan Harris

Dr Brian Iddon

Mr Brooks Newmark

Dr Desmond Turner

________________

 

Examination of Witnesses

 

Witnesses: Malcolm Wicks, a Member of the House, Minister of State for Energy, Department of Trade and Industry, Ms Bronwen Northmore, Director of Emerging Energy Technologies, Mr Brian Morris, Head of Carbon Abatement Technologies, and Mr George Marsh, Advisor on Cleaner Coal, secondee to Energy Group, DTI Energy Group, gave evidence.

Q232 Chairman: Good morning everyone. Thank you very much indeed for coming this morning. Thanks to the members of the public who have joined us for our last oral session in our inquiry into carbon capture and storage. We are delighted, Minister, that you are able to join us. Minister, when the Government published its terms of reference for the Energy Review on 29 November there was widespread speculation at that time that the Government's preferred option was nuclear in meeting the four key goals which you outlined at that time. Ever since then you and the Government's Chief Scientific Adviser have been on a charm offensive to try to persuade all and sundry that carbon capture and storage is really at the head of the agenda. Could you say in 2015 that carbon capture and storage will be in place and certainly in a demonstrable facility in the UK and that the Government will have supported it?

Malcolm Wicks: Chairman, it is good to be here. In an hour and a half's time we will see whether the charm offensive has worked or failed. The point about the Energy Review is that it is very wide ranging. It is looking at demand, it is looking at supply and it is looking at where we will get our energy sources from in the 21st Century and the strategic choices our country needs to make. Within that we will be looking at the potentiality of a range of different technologies ranging from micro wind turbines through to the nuclear power station - and all options are open - and we are very interested in carbon capture and storage.

Q233 Chairman: Minister, with due respect, that really is an answer to satisfy everybody. We want to know whether CCS is at the head of your agenda in terms of dealing with the Government's objectives for 2020 and indeed 2050 in terms of a reduction of carbon in our environment.

Malcolm Wicks: I was just setting the context because when it comes to energy everyone has a favourite technology.

Q234 Chairman: What is yours?

Malcolm Wicks: Only the foolish person would have one favourite technology. In order to meet the energy supply requirements and the fundamental challenge of climate change we will need a range of instruments and within that context we are very, very interested in carbon capture and storage; we are investing in it. I personally think it has enormous potential. At the moment - and I think this might be a theme throughout this discussion when one is asked a range of rather detailed questions - it seems to me that where we are globally on this is probably half-way into chapter one of this book. I think it has enormous potential in terms of our climate change agenda. I would very much hope that into the next decade we would have seen a major demonstration project, the most likely one is the Miller field BP project and after that I would hope there would be other fundamental developments, but it is too early to be entirely confident about that.

Q235 Chairman: So you are saying you are not confident as the Minister for Energy that we will have a proper large scale demonstration plant available in 2015 not only to see if the technology works on a large scale but it is also a technology that would be exportable.

Malcolm Wicks: It needs to be remembered, Chairman, that where we are globally on this is that although we have several items of good practice, if I can put it like that, not least in Norway but also in the United States, we are, I repeat, at a very, very early stage in this. I would hope that by 2015 we would have a demonstration project up and running. The most likely contender in the UK is the BP Miller field project with Scottish and Southern. That would be my hope and aspiration.

Q236 Chairman: Is the fact that Joan MacNaughton is being replaced as the Director General of Energy at the DTI an indication that pronuclear views are no longer the flavour of the month within your Department?

Malcolm Wicks: Chairman, you would like to talk about nuclear, yes?

Q237 Chairman: No. I want to know where your priority is as far as the Government is concerned. We have had no indication as to where the priority is.

Malcolm Wicks: You want to address the nuclear question. That is why you have mentioned Ms MacNaughton.

Q238 Chairman: I am asking you whether the fact that she is being removed from her post or leaving her post is an indication that carbon capture is in fact going to be the main driver in terms of driving down CO₂ emissions over the next 15 years and certainly meeting the Government's target for 2050 of a 60 per cent reduction.

Malcolm Wicks: Joan MacNaughton's future move is no indication of anything about the direction of energy policy. After four years in the post it is not unusual for people to move on and to be reshuffled. One newspaper said it was an indication that she was anti nuclear and another one said the move was an indication that she was pronuclear!

Q239 Chairman: What do you think?

Malcolm Wicks: The truth is what I have said to you earlier.

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 ten per cent or 20 per cent 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 per cent of our electricity but it does not contribute 100 per cent. 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 can start to clean out the carbon dioxide and store it but that they have the technology to enable them to do that. 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 six per cent or seven per cent, 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 as far the review team and the Government's position is 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 the 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 cannot we go quicker and all of that. The Climate Change 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 plan 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 per cent or 30 per cent of the energy supply but it is not 100 per cent. 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 ---

Q260 Chairman: Encouraged, Minister!

Malcolm Wicks: --- that I am very enthusiastic as a lay person, as opposed to being an engineer or a scientist, about carbon capture. If we get this right and the feasible studies, et cetera prove the hypothesis that this is an important development then one or two large schemes can do an enormous amount of good work in terms of capturing CO₂ compared with one wind turbine. My judgment on this is that we have still got to talk about energy supply. The electricity needs to come from somewhere. On renewables, as you know, we have a ten per cent target, in other words ten per cent of our electricity should come from renewables by 2010. At the moment we have what we call an aspiration because it is too soon to get a target that could be 20 per cent by 2050. We having something called the renewables obligation whereby we require the energy suppliers to source some of their energy from renewables. I think that shows our commitment.

Q261 Dr Harris: What do you say to those people who say that investment in carbon capture and storage does not do anything to wean us off reliance on fossil fuels, in fact it encourages reliance on fossil fuels, where we need to have a change in our approach and recognise in the long term, arguably the medium term, we need to do everything we can to move away from burning these things?

Malcolm Wicks: I have a lot of sympathy for that. I know it has led to at least one of our environmental organisations being rather agin the idea of carbon capture. I think that is ideology gone mad myself. Two things are true. The world is going to be burning lots of fossil fuels for a century or more, not least in China but here as well and, like it or not, that is what is going to be happening. That is where these technologies really come into their own and why I am enthusiastic about them. We also need alternative sources and fundamentally cleaner sources of energy hence our commitment to renewables and the need to drive forward on energy efficiency.

Q262 Dr Iddon: You mentioned the agreement with Norway a few minutes ago. What benefits does that bring to Britain in improving opportunities to invest in the North Sea?

Malcolm Wicks: Do you mean the practice in Norway and the SelectNet project?

Q263 Dr Iddon: Britain has signed a recent agreement with Norway.

Malcolm Wicks: That is right. I am enormously encouraged by that. We share the North Sea with Norway, that is the obvious link there. We are also going to be quite dependent on Norway for gas with the Langeled pipeline coming in in a year or so's time. Norway is rather ahead of the game in terms of these technologies. It is the SelectNet project which has stored one million tonnes per year of CO₂ since 1996. The scientists are studying that very well. At the moment I am advised that geologically the CO₂ is behaving as they would expect, namely it is still there, it has not done anything naughty. That is almost the most important demonstration project that we have got.

Q264 Dr Iddon: So it is a transfer of technology and knowledge.

Malcolm Wicks: Absolutely, I think so. I met the still quite new Energy Minister Odd Roger Enoksen on two occasions in his early months of ministerial life and we have had some serious talks about this. We decided together that we wanted to move ahead, not just to talk but to see what issues there were for collaboration and we have signed a Memorandum of Understanding that the two governments and therefore the two industries will work together. Quite where that will lead I cannot say, but I am very encouraged by that development.

Q265 Dr Iddon: Did this agreement cost us anything financially?

Malcolm Wicks: No, just a little ink.

Q266 Dr Iddon: Sir David King has been quoted as saying that CCS is the only way forward for the world since China and India are inevitably going to continue burning their coal reserves. Do you agree with Sir David King's statement that this is the only way forward?

Malcolm Wicks: Yes, I think I do in principle for reasons we have said, that whatever alternatives might develop renewables, we are going to be burning fossil fuels and China is the example par excellence and therefore I think he is right, that if we can get this right it is the only way forward.

Q267 Dr Iddon: You have talked about discussions with China earlier, not with India. Have you entered into discussions with India because they are already burning fossil fuels on quite a large scale?

Malcolm Wicks: We hope to sign an agreement before Christmas with China. We are also in close touch with India. There have been discussions during our presidency.

Mr Morris: We have engaged with India on this issue. There is slightly less enthusiasm to talk about these technologies with India than there is with China. That is not to say we are giving up with India but rather we are still trying to engage India. It is just that China has responded far more positively than India has on these approaches.

Q268 Dr Iddon: Is India or China showing significant interest in the other technologies which have been mentioned, like photovoltaics? They have got sunshine like the rest of the world. Or do you think our encouragement for them to invest in CCS, because we will export the technology to them, is dragging them in the fossil direction rather than in the other directions of energy supply?

Malcolm Wicks: The key development in China is they have so much coal, that is the reality. They are a developing country and they are going to burn coal. They are anxious to burn it as cleanly as possible. The Chinese Government is fully aware of the climate change imperatives here. With the agreement we are going to sign on behalf of the EU we hope to further that. When I meet those from China I am made very aware that they are with us on the challenge here. We are not quite at that stage with India. Biomass, for example, is very important in terms of energy supply in India, so there are different issues there.

Q269 Dr Iddon: Do you think that the UK can lead the world in CCS development and export our technologies?

Malcolm Wicks: I think we need to be cautious in our rhetoric about leading the world. We can become one of the world leaders, yes. We are learning from Norway. There are developments in the States which are interesting. I think we are there and I am pleased we are and we need to make sure we are because not only have we put climate change centre stage in terms of the agendas that count across the world, ie the G8, the EU and the UN, but also, frankly, there should be an opportunity here for the British business sector and for our manufacturing economy. If we can get this right within our shores then I think there is enormous export potential.

Q270 Dr Iddon: How can you say that we are there when we have not demonstrated that we can do it yet on a large scale in this country?

Malcolm Wicks: I think we are there intellectually and scientifically, technologically and politically. In terms of large scale demonstrations, apart from the Norwegians and one or two bits and pieces no one is quite there yet.

Q271 Dr Turner: I think it is quite clear to everybody that CCS cannot afford to fail in terms of China and India and other large scale CO₂ producers. What advice have you been given and what messages do you get from the Chinese, for instance, as to the final practicability of carbon capture in dealing with the whole problem in terms of the geological storage capacity, because if there are not sufficient geological formations in China, India and wherever stores CO₂ then the great project will not work?

Malcolm Wicks: I think I need to defer to one of my expert advisers on this.

Mr Marsh: That is right. There has been some preliminary analysis both with India and China that would indicate that there ought to be the capacity, but part of the MoU work, the £3.5 million, will be used to commission a more detailed geological study to map the sources in relation to where it might be stored.

Q272 Dr Iddon: Obviously some of the developing countries will need significant energy production in the not too distant future. Do you think that those countries can afford to invest in technologies like carbon capture and storage?

Malcolm Wicks: Certainly at the moment we are talking about, as I understand it and common sense dictates, a pretty expensive technology both in terms of the investment that is required but also the costs that it adds to the price of fuel. Although I think it is difficult to give precise estimates, we have had a go at giving our own estimate. I think we have to be realistic at the moment and say this is fairly new stuff. Initially and maybe in the longer term it is expensive and probably there are not a huge proportion of nations at the moment who can afford it. We need to remember that in South America, for example, there is a huge interest in biomass and indeed biofuels. We should not put all our eggs in one energy basket.

Q273 Chairman: You said in your supplementary evidence to us that the cooperation goals include the aim of developing and demonstrating in China and the EU advanced near zero emissions coal technology through carbon capture and storage by 2020. That seems to be an awful long way away. By 2020 will not the damage to the environment be such that we will have missed the boat? Why in 2020?

Malcolm Wicks: In a way I share your frustration because it seems to me in very simple terms that the world is now engaged in a mighty race. I think the serious scientific community knows where the climate is going in terms of temperatures. I think the world is actually behind in this race at the moment in terms of developing policies and behaviours and technologies to enable us to overtake and win this climate change race. For me to be absurdly over-optimistic about the utilisation of these technologies when at the moment we have so few demonstration projects I think would be naive. I hope we can press ahead just as quickly as possible. I think the Miller field project with BP, if it goes ahead, as we all hope, will be slightly ahead of the game in terms of that timescale. We will need to consider this over the next few years. I think to suggest that this is a technology which can be spread globally relatively quickly is probably naive, sadly.

Q274 Chairman: I think my frustration is that if Britain does not demonstrate and does not invest in a significant demonstration plant probably within the next decade then the idea of us being able to export that technology around the world becomes less and less tenable as an argument.

Malcolm Wicks: I agree with you and this is why it is at the heart of the Energy Review.

Q275 Mr Flello: The Pre-Budget Report committed a very welcome additional £10 million to Carbon Abatement Technology demonstrations. Can I ask how the figure of £10 million was arrived at? Could you give an indication as to why it was not included in the original £25 million committed under the DTI's CAT Strategy back in June? Why was it announced just after announcing the Energy Review?

Malcolm Wicks: If it helps the Committee, in a moment I might ask one of my colleagues to give an indication of the kind of projects that we might be able to back with the money that we do have available. I do not think I have a very clear answer on this. The original tranche of money was £25 million plus a further £15 to help develop ideas around hydrogen. I know that is not the subject today but the Committees might want to note that. We were very pleased indeed that the Chancellor was able to allocate some additional money this year. I think that is as far as I can go on these matters.

Mr Marsh: The original Carbon Abatement Technology Strategy indicated that the £25 million could be used either to demonstrate 'capture ready' or to take forward some small scale demonstration of CO₂ storage. It recognised that that money was not in the right ballpark to fund a full scale demonstration. The extra £25 million basically frees our hand to look a little bit more broadly at perhaps more than one such project or to make one a bit bigger than it otherwise would be. We always recognised that the money was to put UK industry on the playing field and that it would put them in a position to leverage additional money from other funding sources such as the European Commission. I see it as strengthening that position.

Malcolm Wicks: It may be that we can help demonstrate CO₂ 'capture ready' plant which, as we saw in the China context, is very important.

Q276 Chairman: Is this not a piecemeal approach rather than having some long-term funding goal?

Mr Marsh: No.

Q277 Chairman: Are you not just going from one thing to another and throwing a few bits in here?

Mr Marsh: The strategy was always to acknowledge that industry has a better oversight of what it is capable of exploiting and how it wants to develop. We have given illustrations as to how that money might be used, but the call will leave it open to industry bidders to say how best they think they can use those funds.

Q278 Mr Flello: How do you feel the £35 million stacks up against the United States' commitment of $0.5 billion for future clean coal projects? Do you think that we are in the same sort of league at all with the Americans, for example?

Malcolm Wicks: I think it is probably rather difficult to compare the two countries because generally on climate change, as you know, the European Union is developing the Emissions Trading Scheme, for example, whereas in the United States certain individual states are very interested in that kind of scheme but there is no equivalent federal programme. I am happy about where we are at the moment, but I am even happier that we have mechanisms now, not least the Energy Review, to address these issues very fundamentally.

Q279 Mr Flello: In terms of ensuring that a plant is built in the UK perhaps with European funded money, what pressure is being put on to try and get a CCS demonstration plant within the UK as opposed to somewhere else within Europe?

Malcolm Wicks: As we have said, the frontrunner at the moment is the Miller field project. It seems to me that BP and their partners are ideally placed there. We do have this natural resource of the North Sea which, if we can demonstrate effectively, as I am rather confident we can do, is a natural storage area for CO₂. I think we have put a lot of emphasis on this. With the monies that we have, the £35 million now, I think we can demonstrate other technologies with partners including this idea of how we make plant 'capture ready'. I think that is very important.

Mr Morris: The EU recently launched a technology platform into a zero emission fossil fuel power plant. The UK is actively involved in that. I chaired the mirror group into that. We have also British industrialists looking at the coordination group, we are very involved in that and we do see the EU work as very central to try and focus technologies, it would be a way of sharing resources. So we see the EU area as a very important area.

Malcolm Wicks: The recent EU OPEC summit meeting in Vienna which I chaired for the EU because of our presidency I think was very encouraging in enabling a dialogue to take place between ourselves and the oil producers about all of the climate change and carbon capture issues and there was agreement that we should move towards establishing a technology centre on this which will be in Kuwait. That is a major step forward because I rather imagined that ten years ago you would not have had that dialogue between producers and the consumers and I was rather encouraged by that.

Q280 Mr Flello: What help is being given to UK companies and academics to get access to the international funding?

Malcolm Wicks: There are a range of international fora on this now.

Ms Northmore: We have a bilateral arrangement with the United States for research and development and we have two quite large R&D projects going ahead under that. We are members of the Carbon Sequestration Leadership Forum which actually is not a funding organisation but it brings together a large number of countries, including the major developing countries, China, India, for information exchange. Although it is reasonably early days, some demonstration projects have been badged as CSLF projects and there is the possibility that that networking will actually lead to future bilateral cooperations and CSLF cooperation under R&D. We also are enthusiastic members of a number of IEA organisations relating to fossil fuels and carbon capture.

Mr Morris: There are two major IEA bodies, the Greenhouse Gas Implementing Agreement and the Cleaner Coal Technology Implementing Agreement which we are involved in. They do mostly desk reports and research into looking at potential fuel technologies like carbon capture and storage. Those two agreements mostly focus on that technology. A load of work is produced by that which then gets fed into UK companies. If we come to the European scene, things like Framework Programmes 6 and 7, then obviously we do get involved in that and obviously we do our best to help within the constraints that we have to help British organisations and companies get some benefit from that. With the Framework Programme 7 which will start next year we are hoping there will be opportunities for British companies to pick up funding for research and development when that takes off.

Q281 Chairman: Minister, since 2002 the Non Fossil Fuel Obligation, which is basically a tax on people's electricity bills, has brought in over £320 million of which £210 million has gone back to the Treasury. Do you not find that unacceptable when that money could be used for the very purposes that we are talking about in terms of research and development? With that money you could have built a complete new facility in terms of demonstrating that CS actually works. What attempts are you making to get that money out of the Treasury and to have it used for what it should be used for?

Malcolm Wicks: I do not lurk around there at night with a bag marked swag or anything like that.

Q282 Chairman: But the Chancellor does. He seems to be taking swag from everybody's electricity bill. It would make a nice cartoon, Minister!

Malcolm Wicks: I am sure someone round here will draw it. What I do find acceptable is that fiscal and tax matters are best left to the Treasury and I am not going to trespass in that territory. What I am satisfied about as Energy Minister is that when you now look at budgetary documents, whereas I would guess, I must check, that ten years ago there would have been very little about climate change, now you have very substantial sections talking about the climate change challenge, with some monies coming forward, an extra £10 million this year and it is clearly pretty central to the agendas that count both in the Treasury as well as in my own Department in Defra, et cetera and I feel that is a very good place to be. The fact that Nick Stern, the Government's Chief Economist has been asked by Gordon Brown to look at the interface between economic measures and climate change with a global reach I think is tremendously encouraging.

Chairman: We do not seem to be recycling that money back in though; £210 million is a lot of money which could be used for the purpose for which it was taken off consumers.

Q283 Mr Newmark: Just to supplement that - you make an excellent point there - there is also this extra tax on oil companies that is in the Pre-Budget Report. It would be interesting to know that with that extra money that is going to be going into the Exchequer - I appreciate you will not have an answer now - it might be an idea to suggest to the Chancellor that at least some of the hundreds of millions that he will be collecting from that goes in to support projects such as this. I am not expecting an answer necessarily but it is something that the Chancellor should consider doing, given that it is an extra tax that he did not have in his previous Budget.

Malcolm Wicks: I think part of the answer to that is that we are tremendously proud, really, of the industry that we have in the North Sea. I have been out myself on an oil rig and you cannot but be impressed by the science, the technology, the leadership and the sheer skills of the workforce out there, and we have a very active programme for the industry to foster that through a partnership which I chair called "Pilot". Having said that, it is not unreasonable, in my judgment, with the price of a barrel of oil doubling or whatever, that any finance minister would want to look at that. I just happen to note that the tax take, which is (and it will depend, I guess) something like £2 billion a year, is almost exactly the cost of the Chancellor's commitment to maintain winter fuel payments for elderly people, which as a pensions minister I know to be about £2 billion a year. I think in terms of the fairness agenda that is a deal I can accept.

Q284 Mr Newmark: Which I would agree with, but I am talking about the extra money that is going to be raised. It would be useful, and I would ask could we have a commitment from you to at least raise this with the Chancellor, that with the extra money (as I said, this is extra money beyond the Budget) he will be raising would he consider ploughing some of that money back into projects such as carbon sequestration?

Malcolm Wicks: We are in very regular dialogue with our good friends at the Treasury.

Q285 Chairman: Could I ask you as well, Minister, if you have these discussions with the Chancellor, about using the money for this non-fossil fuel obligation for the purpose for which it was raised?

Mr Wicks: The Chancellor will read these Committee proceedings avidly.

Q286 Chairman: But you will not go and see him and bang on the door ----

Malcolm Wicks: It was not my Christmas plan, I must admit, but we are in regular dialogue with Treasury Ministers and Treasury officials on this whole agenda. The Treasury are very committed to the climate change agenda.

Q287 Chairman: But you are not committed to getting this money back into your budget to use for the purpose for which it was taxed?

Malcolm Wicks: I am committed to leading the energy review on all of these issues as effectively as I can.

Q288 Chairman: And you have sufficient resources to be able to further this agenda?

Malcolm Wicks: The review has just started. It will draw conclusions; some of those conclusions may have economic consequences.

Chairman: We got nowhere there.

Q289 Dr Iddon: When are we going to see the first commercial plant both up and running? Which year would you predict?

Malcolm Wicks: Of what - sorry?

Q290 Dr Iddon: CCS. The first carbon capture and storage facility.

Malcolm Wicks: As we have said, the front runner at the moment - and I am really pleased it is there - is the Miller field project; the BP project.

Q291 Dr Iddon: What year are they predicting, in your opinion?

Malcolm Wicks: I am not going to predict it because it is a commercial enterprise. Do any of my colleagues know? Have BP made a prediction on this?

Mr Morris: They think they could do it by 2009. So, with these sorts of projects, I suspect 2010 is a possibility. With pathfinder projects like this you are going to find things never go according to plan, but if you say 2010 that will be a reasonable estimate.

Q292 Dr Iddon: We have learnt from BP that there are some barriers which might put that date back. Do you know what these barriers are and, if so, how are we going to overcome them?

Malcolm Wicks: On any of these things there will be a range of barriers and my understanding is that BP are funding the feasibility study on this but would probably want some indication from government, as indeed would this whole agenda, as to whether there will be any financial incentives to so capture CO₂ and store it. I am afraid, Chairman, I cannot be drawn on the precise financial instrument that might be most appropriate, because actually here, and maybe more globally, there is a range, as I recall, of six or eight that you might be thinking of - yes? - but we need to determine together in government whether one is appropriate and if so which one.

Q293 Dr Iddon: We are told that that plant cannot be up and running in 2009, which is their projected date, without considerable government subsidy. Is the Government in discussions with BP on how to deal with that subsidy?

Malcolm Wicks: Yes.

Q294 Dr Iddon: Are you likely to come to conclusions on that in the near future or is it a projected discussion?

Malcolm Wicks: I cannot predict the actual time.

Mr Morris: It is more likely to be pulled in as part of the energy review. The timing is that BP are doing a study at the moment which will be completed by about October/November next year. They are looking, at about that time, for the sort of decisions from government about, essentially, two things: is there going to be an incentive for such a project as this, and they are also looking at issues around who will take responsibility ultimately for the completed storage of the carbon dioxide. They are the two things they are looking at, at the moment, for some answers from government by the time they have come to their own decisions.

Q295 Dr Turner: Presumably it qualifies for R&D tax credits.

Malcolm Wicks: There is a range of possibilities but we are not there yet, I do not think.

Q296 Dr Iddon: My concern, Minister, is that obviously the BP plant is very close to the Miller field, pipelines will be short, therefore, and furthermore they are using carbon dioxide for tertiary oil recovery, which will be some payback. If we are going to capture carbon, store it elsewhere in the country, particularly by retrofit, we are going to incur the costs of pipelines to transmit it to the North Sea. So if this plant at Peterhead requires considerable subsidy can we afford to subsidise the rest of the plants which, for the reasons I have just indicated, will require even more subsidy?

Malcolm Wicks: As I say, how we have a financial regime, whatever that might look like, that incentivises these developments is something very much at the heart of government thinking at the moment.

Q297 Dr Iddon: How many companies are interested in CCS to your knowledge, Minister?

Malcolm Wicks: I have not got a number but my judgment, talking to a range of companies, often international players, is that there is considerable interest.

Q298 Dr Iddon: That is very encouraging.

Malcolm Wicks: As I say, the discussions with OPEC indicate that, too.

Q299 Dr Iddon: We have a considerable number of fossil-burning plants already in Britain and there is discussion of retrofit. Do you think that retrofitting is financially viable in view of two things: first of all, the plants are rather old and are probably going to be needing renewal anyhow? Secondly, to retrofit you would have to close the plant down to a degree, if not completely, for at least 12 months.

Malcolm Wicks: I think there are two kinds of answers to that, as you have indicated. Whether we go nuclear or not, whatever we do we are going to need a colossal amount of investment from the market in new plant over the next 10, 20 or 30 years. That is obvious. I will turn to one of my colleagues to deal with what, for me anyway, is a rather technical and important issue about retrofitting.

Mr Marsh: We supplied some numbers to the Committee on costs based on our own studies, and I did make the point that these are generic numbers based on broad engineering studies. What you see from those numbers is the cost of retrofitting compared to new build is quite close and certainly within the range of uncertainty on the numbers themselves. So I think it will be a commercial judgment by the industry on which way we go. On costs overall, there is not a cheap solution; abating carbon is an expensive thing to do.

Q300 Dr Iddon: Does the Government have a view or a preference on whether we go for pre-carbon capture or post-carbon capture?

Mr Marsh: Again, referring to the same data, the numbers are too close to call and I think it is a commercial judgment that will take into account not just cost but the industry's perception of the risk associated with different technology options, their confidence that it will work and their confidence that they can build it within timescales. I think that is better left to the industrial specialists to make a judgment on.

Q301 Dr Iddon: As a chemist I was against CCS until I met BP the other day. Their plant at Peterhead will be pre-carbon capture which delivers two things: from the gasification of coal it delivers chemicals (it is the old coal tar process, essentially), and secondly it delivers hydrogen for the hydrogen economy. That is pre-carbon capture. In post-carbon capture it is too late; the chemicals are burned and the hydrogen is not available. I put it to the Government that it seems sensible to invest in pre-carbon capture rather than post-carbon capture, for that reason.

Mr Marsh: That is an opinion that we have heard as well and there are counter arguments about post-combustion in terms of that technology being demonstrated to separate CO₂ in other applications, and the fact that just about all of the stock of power stations that exist at the moment would have to have retrofitting post-combustion capture applied to them. So there are strong arguments in favour of both technologies.

Q302 Dr Iddon: We are going to leave it to the market and not give government guidance?

Malcolm Wicks: It is obviously important that the Government understands these arguments at, really, quite a technical level. My colleagues do and they can give me advice on that. However, I think we have to be sensible about this, and there are things that government do best and there are things that the market does best. My own judgment would be that on those issues we need to understand the arguments, but surely we should leave it to the companies involved and to investors to make appropriate judgments. As I say, there are things government can do about giving some stability in the long term, giving the priority to this area but I think for us to think we can give an engineering or scientific judgment would probably be foolish.

Q303 Chairman: There is a worry, is there not, here, Minister, that if, in fact, you are looking in terms, for instance, of a hydrogen-powered, if you like, transport system within 10, 15 or 20 years, then there is a crucial decision to be made as to whether you have hydrogen producing plants on their own and deal with CO₂ separately or whether, in fact, you do as Brian has suggested and try to bring them both together in pre-combustion. Does the Government have a view?

Mr Marsh: I think that is asking a question about the timing of two different sets of technologies, which is a difficult thing to do. We have looked at carbon capture and storage and our belief is that it will be used to produce low carbon electricity to start with. There is time enough to think about how to make hydrogen after that.

Ms Northmore: You can make hydrogen from a range of different sources; you can make it from nuclear, actually, you can make it from fossil coal and renewables, which is what we would really all like.

Q304 Chairman: Brian Iddon's question was about the advantage, in fact, of building this into the pre-combustion phase in terms of dealing with carbon capture, storage and the production of hydrogen at the same time. Is the Government actively looking at that and other chemicals?

Mr Marsh: Just as in carbon capture and storage, we have got capture, transportation and storage - whole infrastructures. By extending to hydrogen you are bringing in a whole additional set of infrastructures on how to store, transport and deliver hydrogen and what kind of vehicles it would be used in. I think there are a lot of open questions within that that determine the timing and whether that timing matches with the timing for the deployment of CCS for electricity generation. Our own modelling studies suggest that that is probably a decade or so after the use of CCS for electricity generation.

Mr Morris: Can I bring to your attention that in the demonstration scheme that we are developing at the moment we are linking carbon abatement technologies with hydrogen production as well. So with the £40 million which was announced in June - 25 million for carbon abatement and 7.5 million for hydrogen - we are approaching that scheme in a very flexible way. So if someone can bring in a project which actually is carbon abatement and hydrogen generation at the same time then they could have access to both those bits of money. So we are recognising there are linkages there and it is an opportunity to exploit them.

Malcolm Wicks: There are big developments in the States on this. When I was in Washington I met GM (General Motors) to talk about their big investment in hydrogen. Indeed, foolishly, they let me drive their hydrogen car. So I have seen the future and it works, to some extent.

Q305 Dr Harris: How safe do you think carbon storage is? It must be safer than oil storage, I guess.

Malcolm Wicks: This is where we need to learn from the demonstration projects, if I can call them that, that we have already and where we need to, obviously, work with BP and others very carefully on the Miller field project. I think the Norwegian experience is, frankly, reassuring, but we are talking about the development of new technologies. To some extent this is unchartered territory and we need to approach this very carefully.

Q306 Dr Harris: Would you agree that we do not yet know enough about the consequences of leakage, particularly in respect of local environmental concentrations, of CO₂ from storage facilities?

Malcolm Wicks: I think what we know from the Norwegian experience, which of course is a good experience for us because it is the North Sea, is that there has not been a leakage problem and that the scientific community studying there (that is the geologists) are highly satisfied about how the CO₂ is behaving. In other words, it is there; it is where it should be.

Mr Morris: There is experience from natural leakages of CO₂. CO₂ is stored naturally; particularly if you look around the Mediterranean basin there is a lot of naturally stored CO₂. In fact, in Texas the CO₂ used there for enhanced oil recovery comes from naturally stored CO₂ over geological time. You do get, at times, some leakage from naturally stored CO₂, so there is some understanding of how it behaves when it does actually leak, but obviously one has to transpose that into man-made storage of CO₂ ----

Q307 Dr Harris: There will need to be some work, I guess, on a review of the potential health and environmental consequences. That would just be sensible to do. Who should do that? Do you think it should be industry and potential investors looking at that, or should it be Government or should it be someone else?

Malcolm Wicks: One aspect of this is the need to revisit the London and the OSPAR Conventions, which are about dumping at sea. I think there is a lack of clarity at the moment about whether or not they allow for carbon storage beneath the sea bed, and we are engaged in those discussions. There would also be, I would judge, a need for a regulatory regime here in the UK (probably elsewhere too) in terms of these storage issues, which would look at some of these environmental factors.

Mr Marsh: As far as the engineering aspect of carbon capture and storage is concerned, in other words the power plant, the pipeline and the operation of the platform, the regulatory standards for safety exist and are operated through the Health & Safety Executive. In fact, I think BP have mentioned that they are in discussions with the HSE about their Peterhead Miller project. So the less defined area is the long-term storage in the geological formation, and that is really a matter of establishing the science and knowledge base to make a convincing case. Our view is that with oilfields and gas fields that have been very well explored in order to be able to exploit them, that knowledge base is particularly strong to show that they should be successful sites for storage of CO₂.

Q308 Dr Harris: You are assuming that the storage facility will come under some external independent regulation like the Health & Safety Executive, or will it be judged to be so low risk that that will not be felt to be necessary?

Malcolm Wicks: As I said earlier, I think there will need to be a regulatory regime, but as to the precise nature of that, obviously, it is still very early days to determine that.

Mr Morris: We are starting to look at whether a regulatory regime is needed. We have already set up a working group to look at that because we realise that that needs to be investigated and we need to understand exactly issues like the need to survey an area before you start to think about storing carbon dioxide in it to make sure it is actually going to be a safe and reliable store of carbon dioxide. One of the things we have signed with the Norwegians is that agreement we mentioned earlier to look into how we develop the principles for regulating the management of carbon storage in the North Sea. So we are very aware of the need to make sure that we will be seen to be being responsible about storing CO₂.

Q309 Dr Harris: Very soon - next summer - the energy review is going to talk about significant investment and plans for carbon storage. What engagement has there been by the DTI with the public to prepare them for some of the issues around carbon storage and capture?

Malcolm Wicks: We are thinking this through and developing a communication strategy on this. I think I would say out of the energy review, and indeed during the process of the energy review, we are going to be engaging with the wider public as well as stakeholder groups on a whole range of energy issues. My judgment would be that we need to take the public with us on where we are in terms of energy and climate change, and the rather difficult and sometimes controversial judgments we are going to have to make. In fact, I have been rather encouraged about the way in which the media, including television, has shown a real interest in some of these issues about carbon capture. Indeed, some of the best things I have seen with graphics etcetera have been on some rather serious TV programmes explaining to the public what this new-fangled stuff is all about. I think that is very encouraging, and I think our work with the media is probably critical to this.

Q310 Dr Harris: Some people have said that it would have been better to have done more work on this already in terms of public engagement. The Guardian described the technology in a headline (one cannot blame the journalist necessarily) last summer as "Carbon Dumping". There may well be concerns and the public may well see this as the new GM. Indeed, I think we were told by BP that public acceptability was a potential show-stopper. Do you wish, in all candour, you were further along the line of public engagement, or are you happy with the amount that has been done so far?

Malcolm Wicks: I am very happy; I am very relaxed about where we are on this. Dr Harris, there are always those who seek to conjure up demons when it comes to any new scientific development, but people like you and I need to engage the public in a better informed debate.

Q311 Dr Harris: I think we would like that in both our parties.

Malcolm Wicks: I am sure together we will.

Mr Morris: When we launched the carbon abatement technology strategy back in June, in the afternoon of that launch we actually did have a meeting with the green NGOs to explain the strategy and discuss it with them, because we recognise that the NGOs are opinion formers and we need to ensure they understand what we are trying to do and how we are approaching it. So we are very aware of that, and we are doing quite a lot of other activities as well in trying to engage people on the issues in order to try and build understanding about the technologies.

Q312 Dr Harris: I would agree with what you were saying, Minister, that you can sometimes not satisfy and you would not want to satisfy every NGO, but I hope you are aware of what they said to us in evidence. When we asked the Green Alliance how effective the Government had been so far in communicating CCS technology to the public, Russell Marsh said: "Not at all", while Doug Parr from Greenpeace asked us, in return: "Has there been any communication about it? I must have missed it". Has he missed it, or is he right?

Malcolm Wicks: I am bound to say his remarks do not entirely surprise me. I think they are so hard at work they have missed it, yes. I, myself, in my modest way, have discussed this on 30 or so radio and television programmes, so, sadly, yes, they have missed it.

Mr Morris: We have been engaging the NGOs; we have been engaging them for two or three years now on this. We invite them along to conferences and other events where they can put their point of view and they can discuss it with us. We have been trying to engage them for sometime now on this; we realise how important they are and that they need to be engaged and consulted.

Malcolm Wicks: I think the serious voluntary organisations are genuinely very interested in this technology because they may wish for an alternative of windmills or tidal doing 100 per cent of this but the serious players know that we can be burning the fossil fuels as we have discussed and that these kinds of technologies are worth investing in.

Q313 Dr Harris: Do you agree with BP that public acceptability could, if it is not well done, be a show-stopper on this issue, like, to a certain extent, it has been with other technologies?

Malcolm Wicks: My own position on this, when I talk to people about this, is that this is very new to people. Let me confess, Chairman, when I was pension minister (whenever it was - nine months ago) I do not think I had heard about this technology. Take that for good or ill, but that is the truth. A lot of people I meet and talk to, a lot of broadcasters, do not really understand it and I think what there is is genuine intellectual interest in it - a bit of an intrigue about it. I do not see people waving shrouds and saying: "No way"; I think the public are addressing this in a rather intelligent way.

Q314 Dr Iddon: I have just one more question in this section, and that is on liability. BP have told us that they are prepared to accept the liabilities of CCS - the chance of a leakage and dealing with it, for example - as long as they are putting the carbon dioxide down into the storage cabin. However, thereafter they are expecting the Government to pick up the liability for eternity, essentially. Has the Government entered into discussions with BP, or any other company, about the potential liabilities beyond storage in this area?

Malcolm Wicks: It is tempting to commit the Government for eternity. During that time period we could even have a change of government! I think the serious point is this: what you are reporting has to be about right, does it not? While it is a commercial matter the company has to take responsibility, and we need to get the regulatory framework right. There would then have to be careful consideration about a kind of hand-over period so that when the responsibility was handed over to the wider state we were sure that everything had been done commercially. Then I think it is just plain common sense that in terms of the very long term (and the very long term is very, very long term, Chairman, is it not - millennia), then it would be unrealistic to think that a company, even a very powerful company that was a big player in the 21^st Century, may necessarily be there to manage it three million years later. Therefore, I commit my successors in three million years to keep a careful eye on this, and you must hold them to account, Chairman!

Q315 Chairman: We will make a careful note of that, Minister, and it will be reported in the report - and, also, that you forecast a change of government sometime.

Malcolm Wicks: During eternity, yes. I am trying to be fair; I am seeking consensus.

Q316 Chairman: We are delighted there is such forward thinking in the Government at the moment.

Malcolm Wicks: There will be new leaders by then, Chairman.

Q317 Dr Turner: Can I ask about regulatory issues? First of all, can I jump back to what we were talking about before? Have you considered the possibility of making it mandatory that future fossil fuel plant should be capture ready?

Mr Morris: We are working with Section 36 of the Electricity Act 1989 and we are starting to talk to colleagues in that part of the DTI about what we would need to do to that. I think one of the things we would need to be able to do is be quite clear how we define "capture ready". Whilst we felt we could define that really well, we have come across some other ideas about what is meant by "capture ready". So it needs to be thought about, but we have already started to initiate action on that. George, you have done quite a lot of work on defining "capture ready". Do you want to add anything to that?

Mr Marsh: I thought I had but industry is much cleverer and pointed out that there might be other considerations. I think Brian is right, there needs to be clarity on what is "capture ready".

Q318 Dr Turner: You are on the case already. That is the main point. It has been suggested that there should be a carbon capture and storage authority to regulate and monitor storage. Does the Government consider that a sensible approach?

Malcolm Wicks: I do not think we are there yet, I really do not. No doubt we will need to be talking about that kind of thing. I am not committing myself to a new quango or anything at this stage but, clearly, the promotion of this, the regulation of it, the research and development - all those things we will need to look at very carefully with industry, but we are not there yet.

Q319 Dr Turner: At the moment, under-sea carbon capture and storage, except for enhanced oil recovery, is illegal until the London Convention and the OSPAR Conventions have been renegotiated and amended. What is the progress on that?

Malcolm Wicks: I may be wrong but I do not think it is entirely illegal. I think there is a lack of clarity on which reforms need to be clarified. However, I could be wrong so I will ask Mr Morris to comment on that.

Mr Morris: I will start but George Marsh has done a lot of in-depth investigation into this. Enhanced oil recovery is legal under OSPAR and London because it is a working gas and, therefore, it is legal. I also think if you look at Sleipner in the Norwegian sector that is also legal because it is actually injecting the CO₂ from the site rather than bringing it from ashore. Under certain circumstances, perhaps perverse circumstances, CO₂ storage under the sea-bed could be legal but work we have been stimulated in the London and OSPAR Conventions themselves has actually concluded that it needs to be clarified. Again, it is something we are engaged in; it is something we have dealt with with colleagues in Defra because they take responsibility for those conventions and it is the UK interest in those conventions. We have been working to get that brought up the agenda. It has now got to a point where both conventions have set up working groups to look at it and see to what extent it needs to be amended. It is generally accepted that the conventions do need to be amended, and this is more likely something which needs to be done and needs to be allowed.

Malcolm Wicks: My understanding - and I am not an authority on them - is that they were about dumping, perfectly properly. Technologically we are now in a new ball game and they need to be sensibly reformed. I am relaxed that they will be.

Q320 Dr Turner: Something else which might well be revised is the Petroleum Act 1998 so that existing North Sea pipelines could be used for transporting CO₂ into the fields. Do you plan to revise that Act?

Malcolm Wicks: I think we are certainly aware that the great advantage of the North Sea is that we have got the pipeline grid there and that it is a natural means of transport for CO₂, as it were, in the other direction. I do not know whether my colleagues can go further than that in terms of what that might mean legislatively, if anything. Perhaps not.

Mr Marsh: Not at this stage. We have had studies looking at the potential use of pipelines and there are issues about how they can be used and what modifications would be needed. We are studying that report at the moment and will consider how to take it forward.

Q321 Dr Turner: Finally, who would take responsibility for the land infrastructure for transporting CO₂ from the capture sites to the storage sites and what are the planning implications involved in that?

Malcolm Wicks: The Miller field project, of course, has Scottish and Southern as the key onshore partner. So that is a practical example at the moment. Brian, can you go any further?

Mr Morris: We have not lost sight of that one. There are planning implications, there are weighing (?) implications. At the moment the work we have done so far implies that we would expect that the visiting consents infrastructure would allow for pipes to be laid. That would be the approach we would be using, but we would need to actually be absolutely clear about that, but we would expect the consents, a regulatory approach, to be the right one.

Q322 Chairman: Minister, would it be possible, perhaps, for you to let us have a written response to this to actually give us some timescales that the department is working to, and indeed that your colleagues in Defra are working to, in terms of getting these agreements in place? It seems crucial, if we are going to give the industry clear guidelines in terms of their investment decisions that the regulatory framework needs to be in place and they need to know that they have got certainty in terms of some of these key issues. Is that possible?

Malcolm Wicks: What I will do is write to you and be as helpful as I can, but I will not, in writing to you, predict the outcome of the energy review and I will not seek to falsely answer questions. I referred at the beginning, rightly or wrongly, to the fact that we are halfway through Chapter One on this book, yes, and perfectly reasonably some of the questions being asked are about things which are a bit further down the track. I do not think it is reasonable that at the moment the Government should have all the answers to those. It could be unhelpful to sketch out a timeline that may not prove realistic. However, within those cautions, I will write to you and do my best to inform the Committee, Chairman.

Chairman: Thank you.

Q323 Mr Newmark: I would not say the Minister is writing a suitable boy (?); the first chapter has already been a fairly long chapter. There is an environmental issue here, industry is waiting for some form of guidance and it would be helpful to keep making sure that this does move along and does not drift. The sense this Committee has had is that there has been a sense of drift and we do want to make sure that is addressed.

Malcolm Wicks: We did discuss some of these issues earlier on in the Committee proceedings. I do not know if you were present to hear it. Do you want me to repeat that?

Q324 Chairman: No, no.

Malcolm Wicks: I think if you look at the record you will see that we discussed some of these things.

Q325 Chairman: I think there is a general frustration that Mr Newmark is ----

Malcolm Wicks: I do not mean to imply the gentleman has turned up late.

Q326 Adam Afriyie: First a couple of quick questions to Bronwen and to Brian, just to establish where we have a consensus on certain matters ----

Malcolm Wicks: The Government has a consensus on these matters, of course, which my colleagues will demonstrate.

Q327 Adam Afriyie: ---- in terms of the technical areas and the industry. In our investigations of the energy industry it seems to me that industry is ready to trade emissions: they have all these fancy computer screens, they are watching the carbon emission price, they have a good model for the costs of the new technologies (obviously some of them slightly exaggerated when it comes to carbon capture), and they have got a good idea of what happens at different fuel prices for gas and coal. Is that your experience, too, in the work you have done? That the energy industry does have a reasonably good understanding of how carbon capture works and the costs and the modelling of it, in general terms?

Mr Marsh: I think it is fair to say that, yes. The point I think the Minister made earlier is that their concern is the time horizon; they want to have foresight for 15 years or so.

Ms Northmore: They have a very clear understanding of the interaction between this and the EU Emissions Trading Scheme, where we are doing work to try and get this ----

Q328 Adam Afriyie: I was not trying to be controversial, I was just establishing the grounds. The second question, again, is a fairly straightforward one but there may be a slightly broader scope on this one. From the data that the Committee has received on cost of carbon capture and storage it seems to average around1.5p per kilowatt hour - between 1p and 2p - whether it is gas or coal-fired, irrespective of whether it is pre- or post-combustion. Do you generally agree with that kind of range of price per kilowatt hour?

Mr Marsh: I think the numbers we have submitted are within that range.

Q329 Adam Afriyie: The final question for the officials is what reductions would you expect to see from the work you have done over a, say, 5, 10 or 20-year time-frame in terms of the cost of actually putting in the carbon capture and storage units on power stations? Just like mobile 'phones, they start at £1,000 and are now down to £50. What sort of timeline do you have in terms of cost reductions in terms of percentages?

Mr Marsh: There we would really depend on the advice from industry, and their indications are that over a decade or so, and I guess it depends on volume of orders as well, there is a technical potential to reduce those costs by the order of 50 per cent.

Q330 Adam Afriyie: It obviously depends on different pricing of fuel but we might see a reduction of, maybe, 50 per cent, say, to .75p or 1p per kilowatt hour ----

Mr Marsh: I am talking about capital costs. Clearly, fuel price affects that as well.

Q331 Adam Afriyie: That brings me to the Minister. The costs and the model are clear, industry just appears to be waiting for a long-term framework, or the political will to do this. Do you have the political will?

Malcolm Wicks: Yes. I have the political will to advise the Prime Minister about the right decisions on energy policy. I indicated earlier that, personally, as a kind of lay person, as I say, even before this august Committee - particularly before this Committee - I am not going to pretend to be a scientist or an engineer, but I feel enthusiastic about this and very enthused by the Miller project, in particular, because it does seem to me, in principle, and I hope in practice - and indeed I suspect in practice but we cannot be sure there yet - that this is a significant contribution to the major challenge facing the world in terms of climate.

Q332 Adam Afriyie: So you have the political will. How will you, as Energy Minister, express that will? You mentioned you have been speaking to the Chancellor or to the Government. How have you been making these representations in terms of the urgency of giving that long-term framework?

Malcolm Wicks: I think this does come back to where we are with the energy review, which has only just been formally announced by the Prime Minister. We have got a team of officials now based in my department but drawn from across Whitehall, with major inputs from other government departments, including the Foreign Office, for example, as well as Defra, the Treasury and Transport, and we will reach our conclusions about this and actually many other things (including some quite controversial things) by the summer. Then the Government will make its judgment about energy policy.

Q333 Adam Afriyie: You are confident that in terms of carbon capture and storage a decision will be reached by the summer?

Malcolm Wicks: I am confident on this technology - that it will be one of the major issues that we are addressing in the energy review and, no doubt, therefore, one of the issues that we will make some significant recommendations about.

Q334 Adam Afriyie: Are you in any way frustrated that suddenly this energy review has occurred, which, in a way, stops the decision being made over carbon capture?

Malcolm Wicks: Quite the reverse; I am energised by it (pun intended).

Q335 Adam Afriyie: Very briefly two other questions. We have been talking about carbon capture but what assessment has been made about the pipelines and infrastructure required? This is to one of the officials: what assessment has been made of the pipelines required and the infrastructure required to pump the carbon dioxide to wherever its final destination is?

Malcolm Wicks: I think we are in a good place in terms of the North Sea because we have the infrastructure, we have a kind of grid there, of pipelines. That is a very, very advantageous place to be. Brian, do you want to say anything else?

Mr Morris: One of the things you have got to be aware of is that some pipelines might not be suitable for CO₂, others might well be, depending on how you treat the CO₂ before you put it into the pipe work as well. We are doing work on looking at that. There has already been some work done and we realise some more work needs to be done, but there is potential for using the existing infrastructure.

Q336 Adam Afriyie: Clearly, the consequences of global warming and the consequences of CO₂ emissions are felt by the whole of the United Kingdom, and indeed by the whole of the world. Do you think it is right that the energy industry should bear the cost of those pipelines or the infrastructure required to move the CO₂ from the plants to the storage depots?

Malcolm Wicks: Can I say, as we have indicated, almost certainly there will be a need for government to put in place a system. I cannot predict what it will be; there are a number of contenders I think -----

Q337 Adam Afriyie: But you are comfortable the Government would be financing that aspect of it?

Malcolm Wicks: Which incentivises the industry, but that does not necessarily imply direct public expenditure.

Q338 Adam Afriyie: So you are saying it is a balance between the industry and government, or industry/government/consumer?

Malcolm Wicks: I am saying I think there are six or eight possible mechanisms and I think one of them, for example, is for us to watch very carefully how emissions trading develops. It is still quite early days on that - the idea of putting a price on carbon becoming a tradable commodity - but that is one of the issues we need to look at.

Q339 Adam Afriyie: Am I right in saying you have not ruled out placing the whole costs on industry?

Malcolm Wicks: We have not ruled anything in or out.

Q340 Mr Newmark: I have one other question, and maybe it is not necessarily for the Minister. As we move along an experience curve with this technology, do you see there are any benefits of economies of scale of actually bringing down the actual cost of this new technology, or not? Or are there going to be significant benefits to it, in your analysis?

Mr Marsh: I am not a specialist in manufacturing, so I cannot say. Intuitively I feel that if there is serious ordering then there must be a combination of economies of scale and learning by doing. Also, I would expect the transport costs must come down as additional projects can tap into an established network of pipelines, but I could not give any accurate predictions on that.

Mr Morris: I think it is worth noting that the carbon capture project, which is led by a number of oil companies with money from people like BP and Shell going into it, they are doing a lot of work looking into this and they reckon the cost can be reduced quite significantly with R&D.

Q341 Mr Newmark: I want to talk on a question relating to what Adam was talking about, which is to do with climate change and certification (?) of the oceans, which affect everybody, and in which we all personally consume energy. As that purchasing goes up in all likelihood, from what I have read, it is going to continue to be a problem. Given we have a global responsibility to everybody, is it fair to expect industry to bear the bulk of the cost for the development of carbon abatement technologies? Is that your view? Or do we, as a Government, in a global sense have a responsibility ----

Malcolm Wicks: I think we have got to look at it together. There could be a view, the old view, that "the polluter pays", which is a fairly recognised principle. I think I have indicated that I think this is going to require some rather special relationship, as it were, between democracy and the industry in helping to incentivise this. Some of it might be European or even more internationally.

Q342 Mr Newmark: Using a different way of looking at that matrix, how would you determine the fairest way then to spread the full social cost of carbon between industry, government and the consumer?

Malcolm Wicks: With difficulty, I would imagine. It is a very complex matter, is it not, and I do not think we are there yet.

Q343 Mr Newmark: No, I was just wondering what thoughts you have put into this.

Malcolm Wicks: I think when you look at this there are a number of ways in which you can incentivise - help fund, if you like - good behaviour. I have mentioned ETS as being one of those - this rather remarkable development whereby there is now a price on carbon. Who would have thought that even 10 or 15 years ago?

Q344 Mr Newmark: If the aim of the Government is to mitigate climate change through reducing CO₂ emissions, should its investment and incentives differentiate between different low-carbon technologies - ie, wind, nuclear and carbon sequestration?

Malcolm Wicks: That is a very good question. I think I think (because I do not want to express ----

Q345 Mr Newmark: We are in the first chapter, I appreciate that.

Malcolm Wicks: It is a long chapter and there are several pages of this chapter which are lasting even longer than I was anticipating, but I am enjoying the dialogue. I think, in principle, there is a case for moving towards the famous level playing field whereby, essentially, government sets challenges and targets in terms of emissions and climate change, and we do put in place an incentive framework, whatever that might be - and I do not know yet. However, within that it is technology neutral. So if the wind turbines prove their worth, and I think they are proving their worth they will play a part of it. There is the nuclear question which we need to look at, yea or nay on that, and there is this kind of technology. So I think there is a lot to be said for a technology-neutral framework which nevertheless is aimed at the carbon challenge. Whether, as we move towards that, there is a case for incentivising and helping fund certain technologies there may well be, and indeed we do have our renewables target and the renewables obligation. So we are indeed trying to push those because we think they are important; we have a carbons building programme, for example. However, in the longer term we should probably be aiming for something more neutral, albeit, Chairman, my only kind of proviso there is there could be something to be said for an energy policy that also promotes diversity, not least given some of the geo-political issues we touched on earlier.

Q346 Adam Afriyie: In the Chancellor's Pre-Budget statement I think he said something along the lines: "There would be consultation on the barriers to and the incentives for the widespread deployment of carbon capture and storage technology". I do not know if you recall that.

Malcolm Wicks: Yes.

Adam Afriyie: If so, who will you be consulting, what will you be consulting them about and how will the results be reported?

Q347 Mr Newmark: And over what timescale?

Malcolm Wicks: As I say, you have got the Nick Stern review which is global in its reach; as it were, the Government's Chief Economist looking at climate change through, I guess, a sort of economic lens. That is very important. Then we have our own energy review, and that is reporting by the summer. So it is quite a tight timescale. We will be consulting (I had better not say "all the usual suspects"), but the department, as you would imagine, on the energy and industry side, has a range of mechanisms. I meet folk every day and we talk about these kinds of things. There is a range of industrial organisations, trade associations, NGOs, etc, who we are in dialogue with and will be consulting with on these issues and seeking evidence.

Q348 Chairman: This is a most remarkable review in the history of government if, within six months, you are going to be able to resolve these issues in terms of actually laying out a timetable for decision-making which will satisfy our energy needs, dealing with CO₂ emissions over the next 20 to 50 years. Are you confident that that can be achieved in the next six months?

Malcolm Wicks: Yes.

Q349 Chairman: Fantastic.

Malcolm Wicks: I also note, Chairman, that Members were saying earlier why have we not done this already, and I can also anticipate the questions (with respect, sir) if I said to you this was going to take three years.

Q350 Chairman: We are just very impressed, and I want you to know that, Minister.

Malcolm Wicks: I hope the fact that you are impressed will be minuted.

Q351 Mr Newmark: There will be a follow-up meeting in six months' time, though.

Malcolm Wicks: In the written word irony never works, does it?

Chairman: You put a question mark at the end of it.

Q352 Adam Afriyie: You have kind of predicted the questioning, but industry said very clearly to us during our investigation that if there was a carbon price between 20 and 40 (pounds or euros) per tonne for, say, 15 years beyond 2012 they would make their decisions today. I did believe them. They were saying: "We are ready; if you just give us that price then we will invest today. Will you give them that price within six months?

Malcolm Wicks: We will present a framework that incentivises proper behaviour when it comes to the climate. I am not going to talk now about prices or a particular mechanism because we just heard the enormous challenge that this great review has over a six-month period, and funnily enough we are at the beginning of that period and not at the end.

Q353 Adam Afriyie: My concern is that industry has delivered a solution to the Government: "Hey, give us this price. Job done." You are saying you are not necessarily going to take that solution?

Malcolm Wicks: We will certainly consider it very carefully.

Q354 Mr Newmark: This brings me on to my next question: if you are not willing to underwrite the carbon price, how else will you provide industry with the long-term certainty that they need, and which incentives will be under discussion in the climate change programme review?

Malcolm Wicks: As I indicated earlier, when you look at how you incentivise - when I say "good behaviour" I do not mean that pejoratively because that is what we want - we have all got to behave properly vis-à-vis our planet. That is all I mean. I think there are a range of mechanisms. We do not see this as a great public spending programme; we do see it about using market mechanisms, which the commercial sector will understand, to achieve results. Having said that and having laid down that principle, there are different ways you can do it. There is beginning to be some interesting experience with the ETS, etc, for us to draw on. Sadly, I cannot go further, but what I do recognise, as I think we discussed earlier - and it is not just industry is that the challenge needs some long-term certainty, because major investments are required in the British energy infrastructure, whether it is the new power stations, or renewables or this carbon sequestration territory, and we need a framework which will stretch over a very long period of time. I do recognise that.

Adam Afriyie: You must be concerned that 275 million tonnes of CO₂ will be pumped into the air in the next six months from Britain alone; you must, surely, be wanting to work more quickly than six months.

Q355 Chairman: Just say "yes", Minister.

Malcolm Wicks: I would love the National Health Service to have been set up in the 1920s instead of the 1940s. We are all frustrated about this; we are all seized by the urgent issues facing our planet, but you, sir, will recognise that this is the first government to take this challenge seriously.

Q356 Mr Newmark: You made a good point in identifying that it is important that there is a long-term solution and a long-term strategy, because when money is put in it is billions of pounds and what industry does not want is the incentives or the rules chopping and changing along the road. I am hoping, whether it is six months, nine months or within a reasonable time frame, when you do come up with your solutions and incentives and everything else, that it is fairly fixed and industry does not find the rules are very much changed in 24 or 36 months' time, once they have started spending the money.

Malcolm Wicks: I do understand that. A week may be a long time in politics but 500 years is not very long when it comes to climate change and we need to act quickly. I think we need to build a consensus. Indeed, I have already started this; I am anxious to talk to other major political parties about this matter. Just in case, you know!

Q357 Chairman: That is twice you have made that comment, Minister.

Malcolm Wicks: I am obviously excited by all the leadership stuff going on.

Q358 Dr Turner: How seized are you about the need to synchronise enhanced oil recovery and carbon capture and storage with a view to full exploitation of the remaining North Sea oil reserves? Are you taking that into account in your planning?

Malcolm Wicks: Well, yes. When we say "our planning", I think that is one of the reasons why the commercial sector are partly interested in that. How we foster the North Sea and the whole UK CS is now very important. Maybe it is another discussion, but I am pleased, as it were, to have inherited, as Energy Minister, what is called the "Pilot partnership" where we sit down regularly with industry in the UK CS, the North Sea, to talk about these things, because two things are true about the North Sea, as you know. One is that, yes, it is in decline, in the sense of the oil and the gas there, but the second thing that is true, and I think this is as important - and this is not a prediction because no one knows - is that there is probably 40-50 per cent of the resource still there. How we foster that and how we encourage new entrepreneurs into the North Sea - the last licence round which I authorised had 20 new companies coming into the North Sea for the first time - is very, very important. Clearly, as the decline occurs, then scientifically, technologically and engineering-wise it gets more difficult to access the oil and gas that is there, as a broad sort of statement. It is helped, of course - there are pros and cons - by the rather high price of a barrel of oil at the present time, but I think if we can develop technologies which are win, win, win, in the sense of dealing with the CO₂ issue but, also, enabling the sector to recover more oil, then I think the thing becomes more commercially viable and is good for the United Kingdom as a whole, in terms of our energy requirement.

Chairman: Minister, on that note we will bring this session to an end. May I say that we started hoping that the Government would have vision, because we feel at the moment it is a vision that is needed and it is also decision-making that is needed. You have assured the Committee that within six months that vision will be in place, and for that I am extremely grateful. Can I thank you and, indeed, your officials for the session this morning?

Malcolm Wicks: Thank you, Chairman.