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House of Commons
Session 2007 - 08
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General Committee Debates
European Standing Committee C Debates

Carbon Capture and Storage



The Committee consisted of the following Members:

Chairman: Mr. Joe Benton
Baron, Mr. John (Billericay) (Con)
Cunningham, Tony (Workington) (Lab)
Heathcoat-Amory, Mr. David (Wells) (Con)
Hendry, Charles (Wealden) (Con)
Hopkins, Kelvin (Luton, North) (Lab)
Horwood, Martin (Cheltenham) (LD)
Kirkbride, Miss Julie (Bromsgrove) (Con)
Mudie, Mr. George (Leeds, East) (Lab)
Southworth, Helen (Warrington, South) (Lab)
Tipping, Paddy (Sherwood) (Lab)
Touhig, Mr. Don (Islwyn) (Lab/Co-op)
Webb, Steve (Northavon) (LD)
Wicks, Malcolm (Minister for Energy)
Hannah Weston, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 119:
Palmer, Dr. Nick (Broxtowe) (Lab)

European Committee C

Tuesday 13 May 2008

[Mr. Joe Benton in the Chair]

Carbon Capture and Storage

4.30 pm
The Minister for Energy (Malcolm Wicks): May I welcome you to the Chair, Mr. Benton? Carbon capture and storage technologies have a vital role to play.
Steve Webb (Northavon) (LD): On a point of order, Mr. Benton. I apologise for interrupting the Minister, but I am a complete novice at these Committees, having done only one before. The last time, the sequence of speakers included someone from the European Scrutiny Committee. I wonder why that was different, and whether that in any way inhibited our discussions. I would be grateful for your guidance.
The Chairman: The Member from the European Scrutiny Committee should have been here for half-past four. I realise that he is not here, but we can carry on.
Malcolm Wicks: I was welcoming you to the Chair, Mr. Benton, and I welcome Members on the Liberal Democrat Bench. The hon. Member for Northavon has set a new record for an early intervention, although I realise that it was on a point of order.
CCS technologies have a vital role to play in meeting our twin challenges of tackling climate change and ensuring secure energy supplies. As we know, fossil fuels will continue to play an important role in the UK’s electricity generation system as we increase the proportion of renewable energy in our energy mix. As we said in our energy White Paper last year, coal-fired generation makes an important contribution to our energy security and to the flexibility of the UK’s energy system, but its environmental impact must be managed effectively if it is to have a long-term future. CCS has the potential to reduce emissions from fossil fuel power stations by up to 90 per cent., and the International Energy Agency estimates that it could contribute as much as 28 per cent. of the global mitigation of carbon dioxide by 2050.
Although the individual elements of CCS—capture, transport and storage of CO2—have been demonstrated, there are no examples of commercial-scale operation of the full CCS chain on a fossil fuel power station. This is the critical next step, therefore, in the development of this exciting technology, and one in which the UK is taking a real leadership role. We are currently in the middle of a competition to select a commercial-scale CCS demonstration project to be supported by the Government. When operational, it will be one of the world’s first examples of the full chain of carbon capture, transport and storage on a commercial-scale power station.
We are also fully supportive of the European Commission’s ambition to have up to 12 commercial-scale CCS projects by 2015. That was reaffirmed in its recent communication, which set out actions to achieve the goal and committed the Commission to view state aid for CCS projects favourably and to create an EU network to transfer knowledge gained from the first projects.
Nevertheless, a robust regulatory framework that ensures that CCS is undertaken in a responsible and environmentally safe way is a prerequisite for the demonstration and deployment of the technology. The objective of the draft directive that we are discussing today is to remove existing legislative barriers to the geological storage of CO2 and to create an EU-wide regulatory framework for CCS, including the transport element of it. We fully support the objectives of the directive and broadly support the approach taken. I will outline its key provisions and the Government’s objectives for negotiation.
The directive contains detailed provisions on site selection to ensure that only suitable sites are selected for CO2 storage. It then requires operators to obtain a storage permit for CO2 injection in the operational period. When injection ceases and the site is closed, responsibility for the site, including annual monitoring and reporting, will remain with the operator during the post-closure period. Once the competent authority is satisfied that the CO2 will remain permanently contained, it will take over long-term responsibility for the store. That approach is similar to the one in the proposed regime for offshore CO2 storage, which some colleagues will remember as a feature of the Energy Bill. We will be consulting on the detail shortly.
As we go through negotiations, we will work to ensure that the directive remains a well-balanced piece of legislation and retains its flexibility to allow a site-based regulatory approach. Our first key objective is to ensure environmentally safe storage of CO2. We believe that, subject to a few amendments, the draft directive will reflect existing international agreements on environmental protection, including the London protocol and the OSPAR convention on the protection of the marine environment of the north-east Atlantic, which have been amended to permit offshore CO2 storage. That will allow member states that are contracting parties to OSPAR to use their transposition of the directive to ratify the OSPAR amendments on CO2 storage.
Secondly, we want to ensure that wider deployment of CCS will be carried out in a responsible manner. The proposed directive focuses on environmental protection but without giving recognition to the health and safety concerns associated with capture and transport. We are confident that they can be regulated effectively at national level but would like that acknowledged in the preamble. As in the OSPAR convention, we want the directive to acknowledge the need for member states to safeguard other uses of the space such as for oil and gas exploration and wind farms. We will seek to ensure that the issuing of permits can be carried out in a way that respects those obligations.
4.36 pm
Sitting suspended for a Division in the House.
4.51 pm
On resuming—
Malcolm Wicks: Let me remind the Committee where we were. I was saying that our third objective is to encourage the widespread deployment of carbon capture and storage, and that we were concerned about the proposed active role of the Commission in the approval of draft permits, which we believe to be unnecessary. We would prefer the seeking of an opinion from the Commission to be optional.
Finally, we support the Commission’s intention to require that new power stations are designed to be carbon capture ready—built to allow CCS to be retrofitted in future. It has done that by including a requirement for new plants of over 300 MW that are covered by the large combustion plant directive to be carbon capture ready. However, we want to ensure that the requirement is appropriate to delivering the desired outcome. There will soon be a UK consultation on this issue—alongside those on our offshore regime and on aspects of the proposal—to feed into negotiations, which we hope will conclude this year under the French presidency. Overall, we seek a directive that balances the need to ensure that CO2 will be stored safely and reliably against the need to avoid unnecessary and burdensome technical requirements that would not improve reliability or safety.
The Chairman: We have until 5.45 pm for questions to the Minister. I remind hon. Members that questions should be brief. Subject to my discretion, it is open to a Member to ask a series of related questions one after the other. However, I hope that hon. Members will bear in mind the interests of other hon. Members who might wish to pursue a sustained line of questioning.
Charles Hendry (Wealden) (Con): It is a pleasure to serve under your chairmanship, Mr. Benton. It seems only a short while since the Minister and I were discussing these matters in a Committee just down the corridor, so I have a sense of d(c)j vu—or is it d(c)j entendu; I am not quite sure in these circumstances.
There is an issue that it would be interesting to know more about. We discussed carbon capture and storage at significant length in our Committee debates on the Energy Bill. Do any elements of the directive go against aspects of the Bill. Would anything need to be revised through subsequent legislation? In that light, do the Government propose to make any further changes to the Energy Bill in another place?
Paddy Tipping (Sherwood) (Lab): Will the Minister outline the progress of the demonstration plant process? I know that several bids have been made; when after the demonstration bid does the Minister anticipate that new plans will come online? Will we be ahead of our European partners in that respect? How far advanced is the UK on CCS compared with our European partners?
Malcolm Wicks: I thank my hon. Friend for that question. He is right that we are rather ahead of the game on CCS. The decision to fund the demonstration project was taken in May last year. The competition to select a project was launched in November 2007, as promised. We are aware of only two other countries—the United States and Norway—that are funding similar scale projects, both of which are likely to be operational within the same time frame. While it is important that the demonstration power plant is up and running as soon as possible, it is also important to get the demonstration right and to allow companies sufficient time to undertake their design and engineering preparatory work and therefore to bid. We have now had nine bids for the competition.
The time frame the project is following reflects the technical requirements here and we remain on track to have a commercial scale CCS project operational by 2014. With nine projects, we probably need about one year for the technical assessment. This is cutting-edge technology. We announce a winner next year if I recall rightly. We hope that our preferred bidder will be announced early next summer. I think that is roughly the time scale. We need to be a little patient, but we are on schedule for the demonstration plant to be up and running, based on a coal power station, as my hon. Friend knows, by 2014.
The Netherlands are now considering work in this area. I mentioned the United States developments, but as far as we can see only Norway is in the same time frame as us in Europe. I rather wish we were not ahead, to be honest. We need a large number of demonstration CCS projects across the world, which is why we support the European Commission in saying 12. But within Europe as a whole, only Norway and ourselves are making significant progress.
Steve Webb: May I pick up on a couple of issues that the Minister raised and ask for some clarification? He used the phrase “carbon capture ready” which is different from CCS ready because the word “storage” is not in there. The distinction is that a fuel plant needs to be able not only to capture carbon, but to store it. To store it, an infrastructure needs to be in place to get the captured carbon from the plants to wherever it is going to be stored. It might be on the back of a lorry, or in pipelines—it might be all sorts of mechanisms.
Will the Minister clarify this because my colleague in the European Parliament who is the rapporteur on CCS is keen that the requirement to be carbon capture ready is actually a requirement to be CCS ready? In other words, that means having the system tested and proven, having the infrastructure in place to store the stuff coming off site, and having somewhere to put it, not simply being able to capture it and wondering what to do with it? I have a second question, but perhaps I can leave it there and come back on a separate issue.
Malcolm Wicks: As the hon. Gentleman acknowledges, we are going to be consulting on what we mean by carbon capture readiness. There is no secret that we need new power plants to be carbon capture ready, but that could mean a variety of things. At the minimum—we want to go beyond that—it could just be a great space, such as the car park beside the new power plant. We want to consult so that we can see whether there is consensus about what we mean by carbon capture ready. We would want to look at how that relates to CCS ready in the consultation.
The Chairman: Is the hon. Gentleman’s second question related to the first?
Steve Webb: It is on a separate topic.
Kelvin Hopkins (Luton, North) (Lab): It is a pleasure to serve under your chairmanship, Mr. Benton. I apologise for being slightly late. The European Scrutiny Committee was somewhat concerned by the Government’s reluctance to involve the Commission in the issuing of permits. By and large, I would much prefer things to be done at the member state level than at the European level. In this instance, however, might it not be sensible for the European Union to have a greater role rather than a lesser one, given that capture and storage has to be promoted energetically across the whole Union, not only in Britain?
Malcolm Wicks: That is why we support the broad objectives of the directive. We are pleased that there is a directive, and we are pleased with the Commission’s ambition for at least 12 projects across the European Union.
As ever, we need to be concerned about subsidiarity. We want the directive to be an enabler of CCS projects, so we do not want what I might call double regulation. On some of the issues that I mentioned in my speech, we will try to improve the directive so that projects can move forward sensibly. We are the leader of the pack, and we are working closely with the EU. I repeat that we want to see more projects coming forward.
Charles Hendry: Will the Minister tell us a little more about why the Government felt it right for Britain to go ahead with a pilot project on its own and not to co-operate more with our European partners or other countries in the process? He spoke of being ahead of the pack, but if other countries work together on international projects, is there not a danger that they will catch us up and even overtake us on the technology? Why, precisely, did the Government decide that it was right not to go down the route of international co-operation?
Will the Minister also tell us what criteria the Government will use to select the winner of the pilot project? Will that be based on the technology or cost, or a combination of the two? Exactly how will it work?
Malcolm Wicks: We want to see the international development of CCS, both within the European Union and beyond. For example, we are pushing for the inclusion of CCS in the clean development mechanism in international negotiations. That is our position, and many other countries feel the same. It would be a crucial means of achieving technology transfer to developing countries.
The hon. Gentleman knows—we have discussed the matter a number of times—that we made our judgment in favour of post-combustion technology for CCS because of its applicability in China and perhaps other countries where numerous coal-fired power stations are being built. Whatever the virtues of pre-combustion technology, Norway will use it, which is good because we need to demonstrate different technologies. However, when making our decision, we had our eyes on China, not only the UK.
We have been working with other lead countries on CCS technology in a number of meetings. I was at the international energy forum in Rome a few weeks ago and, on my initiative and that of my colleague the Norwegian Minister, a number of interested countries had an informal meeting about CCS. Although we do not wish to establish another formal forum—there are quite enough of those in Europe and internationally—we will be working informally with a number of countries to develop policy and leadership on CCS.
It might have been good to have waited for other countries to develop technologies, but not many were showing leadership on the matter. We felt that a demonstration was needed not only in Europe but internationally, not least in China.
Steve Webb: One issue that is central to the document that we are considering is long-term storage and possible leakages—and liability. Will the Minister say more about the UK’s approach? In the Energy Bill, an analogy was drawn with the long-term storage of nuclear waste, and it was conceived that a fund could be set up so that there would be a pot of money in case of long-term problems after a company was dead and gone. That approach has not been adopted in relation to CCS, as far as I am aware. I do not want to put any further obstacles in the way, but will he clarify the issue of long-term liability? The documents suggest that the carbon will be stored long after some of the companies have gone. Who will pick up the tab, and how will we ensure that companies do not deliberately fold, for example just to saddle the taxpayer with the liability?
Malcolm Wicks: Essentially, it is a question of ensuring that the company involved has responsibility for storage, the closure of the store at the appropriate time and, for some, monitoring thereafter. Only when Government are confident that all that work has been done will the responsibility pass to the Crown estate, which, on behalf of wider society, will take on long-term stewardship of the carbon stores after they have been de-licensed. It is not dissimilar to some other issues, such as nuclear. There will come a point when society, through an appropriate agency—in this case, the Crown estate—will take on the long-term role, but we must ensure that the companies responsible do the appropriate work when storing, as well as for a period thereafter.
The hon. Member for Wealden asked me about the criteria for judging the winner. There will be a variety of criteria—if it is helpful for me to write to him with more specifics, I will—to ensure that the best bidder or consortium is selected. As I have said, one criterion is that we will want to know about transfer and knowledge transfer arrangements so that the technology can be used in other countries, such as India and China. If he finds it helpful, I will give him more detail.
Kelvin Hopkins: It is perhaps not the spirit of the times, but I am one of those who would have liked to see the whole process in the state sector anyway. However, I put that to one side. The hon. Member for Northavon anticipated a question that I was going to ask, which relates to one of the concerns of the European Scrutiny Committee. If the state had a much stronger liability or responsibility for the long term, would it not be likely that it would place much stricter regulation on the companies involved to make sure that they got it right from the beginning and avoided safety concerns later?
Malcolm Wicks: I think that I can satisfy my hon. Friend’s traditional statism by reminding him that the Government are showing leadership on the issue on Parliament’s behalf by financially backing the demonstration project. I have said in Committee that several hundreds of millions of pounds will be required. Yes, we need to be strict with the commercial players. That is one of the reasons why, through the Energy Bill—which is now with their lordships and will return to the Commons in due course—we will set up an appropriate regulatory regime. There are all sorts of issues involving the safety of the seas and marine life, as well as the health and safety of human beings, that we take most seriously. I do not need to remind my hon. Friend that at the end of the day, we need to facilitate such projects. We want them to come on successfully.
Charles Hendry: The Minister said that the European Commission would be willing for subsidies to be given to carbon capture and storage. Will he clarify what that means? Does it mean support for the development of the technology, or longer-term support towards the running costs? Where does he see the borderline between enabling a technology to develop and providing state aid to an industry, perhaps to that industry’s competitive advantage over other forms of power generation?
Does the Minister think that subsidies for the cost of extra land for the CCS facility would be for building the CCS facility itself, or for building the pipeline infrastructure? Does he envisage the pipeline infrastructure being put in place by the Government or by the operator? If it will be the latter, would we run the risk of there being masses of pipelines from every facility, or does he expect that one will serve several of them?
The Chairman: Order. Before I allow the Minister to reply, may I ask members of the Committee to keep to one question at a time, if possible, to help the Minister?
Malcolm Wicks: The short answer to the question on the Commission’s position on future funding is that it is willing the end. I think that that is the right way to put it. The Commission wants 12 demonstration projects, and we certainly support that ambition, but the reality is that the EU does not have a budget for even one CCS demonstration project in the current financial circumstances.
We have to be realistic about this. The Commission has helpfully paved the way for state aid approval for the projects and clarified that some member states will be able to use structural funding to support them, but there is no project funding as such. Any new EU financing would need to add value to member states and industry activities. At present, we are not in a terribly advantageous position in respect of Commission funding.
However, I remind the hon. Gentleman that future funding could come through the emissions trading scheme. As he knows, we wish to include CCS under phase 3. The forward price under phase 3 is—I hope I have this right—about €40 per tonne of carbon. Of course, as with the development of other cleaner and greener technologies, a reasonable price for carbon is one way of financing projects. In some circumstances, enhanced oil recovery would be another way of making some of this commercial, but I suspect that there will still be a funding gap in the immediate future, and we need to be aware of that.
The grid is an important aspect of CCS. It would not be for the state to build or fund it, but it would have to be part of an overall commercial proposition. The hon. Gentleman is absolutely right. One can envisage a demonstration project with, perhaps, just a simple pipeline. It would not be simple, of course, but there would be just one pipeline. Sooner or later—not tomorrow, but as part of future thinking about CCS in the UK, let alone in the rest of Europe—we would need to think about a relatively sophisticated grid network. Of course, that has implications for the kind of grid infrastructure that has been developed on the UK continental shelf and in the North sea. We need to think through some of those significant implications.
Steve Webb: Perhaps I can pick up one of the points that the Minister made about the funding gap. He mentioned the emissions trading scheme, under which a tonne of carbon that is captured is treated as not emitted. What does he think about a proposal that has been made by Chris Davies MEP to go one step further than that and offer, in effect, a double credit? The only way to get serious support for CCS at a European level—as the Minister said, Europe does not have much of a budget for it—would be a credit per tonne recovered in addition to the absence of a penalty, if the Minister sees what I mean. Would the British Government at least be open to looking at that idea as an incentive to use CCS not just in this country, but across Europe?
Malcolm Wicks: First, let me reiterate that we support the inclusion of CCS in phase 3 of the ETS as it could be a significant driver for development. As the hon. Gentleman will understand, much depends on the price of carbon, but that is not looking too bad for the future.
As the hon. Gentleman indicated, there are two other ideas about providing additional support for CCS demonstrations that relate to the ETS. First, the Commission has proposed the hypothecation of 20 per cent. of revenue from the auctioning of ETS allowances to fund low-carbon technologies such as CCS. The Government do not support hypothecation and therefore do not support that proposal. We believe that it is up to member states to allocate revenues from this source, which we assume will be significant.
The second idea is closer to the point that the hon. Gentleman made. MEPs have proposed that the first 12 demonstrations should receive an additional credit under the ETS for every tonne of CO2 stored. That seems to incentivise carbon storage rather than carbon abatement—that is a technical issue. The objective of the ETS is to enable the market to find the cheapest way of abating carbon; it is not to fund any particular technology. However, we are still considering that proposal and others that have been put forward. I reiterate that we must not distort the ETS, but the idea is interesting and one that we would like to consider, at least.
Kelvin Hopkins: I have spoken to a few colleagues in the House who have specific interests in this area of policy. They are concerned that in spite of Britain’s ample lead—I commend my hon. Friend and the Government for taking this initiative—it will be 10 or 20 years before things start to take off. Will my hon. Friend comment on that? Can anything more be done to drive matters forward and to make things happen sooner in Britain and elsewhere in the world?
Malcolm Wicks: We are at an exciting but frustrating time for the development of the technology. The planet cannot wait for ever, and we are committed to the technology being demonstrated fully in Britain. People want certain things from the development of renewable and nuclear technologies—I know that the Liberal Democrats are in favour of one but not the other, although I cannot remember which—but International Energy Agency projections clearly show, and this is plain common sense, that the world will be 80 per cent. reliant on fossil fuels for a long time. We might wish that that were not the case, but it is. As far as I can tell, therefore, CCS is the only technology in town that can help us to tackle the problem. I am frustrated by that, and I wish that the technology had been demonstrated 10 or 20 years ago and that the issue now was how to universalise that technology, but we are in a less developed position than that.
We are not quite at the research and development stage, but somewhere between R and D and demonstration. In this decade—the first decade of this century—we will probably see the start of demonstration projects that will, I hope, come to fruition and demonstrate the viability of the technology in the second decade of the century. During that decade, we must try to ensure that the technology is internationalised. I share the sense of frustration about progress, but that is just where the science and technology are at. Meanwhile, we need to demonstrate the technology, as we are doing in Britain and across Europe.
We need to put in place a regulatory framework in the UK and across Europe, and that is what we are discussing today. We also need to look at international conventions to ensure that they will not stand in the way of technology, and we need to think long and hard about how we will financially incentivise schemes in the future. The ETS in Europe is crucial, and I hope that a cap and trade scheme might emerge that is equivalent to the ETS in north America. That is the kind of thinking that we need, and there are signs that that might happen.
Let me return to the question that the hon. Member for Wealden asked about grids and infrastructure. I should have said that we are aware that the European Union is doing a study on the kind of EU infrastructure that might be required.
Charles Hendry: May I take further the issue raised by the hon. Member for Luton, North? The Minister will be aware that, over the next 10 or 15 years, much of our coal-fired generation capacity will be decommissioned and bids will be made to replace those with new coal-fired plants. We already have one at Kingsnorth and there will be others. Only one can be considered for the Government’s pilot project—by definition, because there will be only one project—but it is possible that none of them will be successful in securing it.
Does the Minister foresee giving consent to coal-fired power stations that are not carbon capture ready or that could be operated without CCS? There would be profound concern if we built a new generation of coal-fired power stations that did not have carbon capture capabilities built into them.
Malcolm Wicks: The hon. Gentleman understands that Kingsnorth is a live planning application, and I cannot comment on what decision the Secretary of State will make or when he will do so. Because it is public knowledge, I can say that E.ON, the applicant, has asked for a deferral of the decision until the Government have concluded their planned consultation on the carbon capture readiness of new power stations.
The difficultly is caused partly by the fact that it is early days in the development of the technology, as we heard in earlier exchanges. The hon. Gentleman is right to say that a number of power stations are beginning to reach the end of their useful life. One reason why we want to consult on carbon capture readiness, and on what we mean by the term, is the fact that we face a dilemma. I understand people’s concern about coal power stations, but we are not yet in a position to say that they must have CCS because the technology is not ready. However, I also understand the public’s and businesses’ concern to have energy, and we do not want over-reliance on imported gas. Those are some of the issues that we need to bear in mind.
Kelvin Hopkins: I have a final question. Given that Britain seems to be taking a lead on promoting CCS and is ahead of other countries, has my hon. Friend made an assessment of the economic benefits that we might gain from developing the technology and exporting it?
Malcolm Wicks: There are sure to be benefits by being ahead of the game with one or two other countries in developing the technology. As I indicated, our main ground for picking the technology of post-combustion is altruistic—it is because of its applicability to China. However, I am sure that there will be opportunities for British companies to be at the forefront in its development. There will also be a number of skilled jobs. My hon. Friend reminds us of an important factor.
Charles Hendry: I, too, have a final question, which I know will bring joy to the heart of the hon. Member for Leeds, East. Has the Minister had discussions with his European counterparts about the production of methanol, which requires CO2? Discussions are ongoing about how CO2 emissions from power stations could be used to produce methanol, and many car companies are exploring the use of cars that can be driven on methanol, ethanol or petrol. That is another way to use CO2, but there would be no need for the huge infrastructure that would be required by carbon capture and storage. It would be an alternative way of getting rid of the CO2. It would not get rid of if for ever, of course—it would be released eventually—but at least the power stations would not be producing CO2 as well as cars.
Malcolm Wicks: Having been in danger of showing off my profound knowledge of this technology, it is humbling to say that I need to take further advice on the hon. Gentleman’s question. If he will forgive me, I would like to write to him on that point, although I obviously know something about the production of methanol. That is not the focus of debate in the EU; rather, we are focusing on permanent storage. I shall take further advice on the subject and I promise to write to the hon. Gentleman.
The Chairman: If there are no further questions, we shall proceed to debate the motion.
Motion made, and Question proposed,
That the Committee takes note of European Union Document No. 5835/08 and Addenda 1 and 2; notes its objective of removing legislative barriers to the geological storage of carbon dioxide in existing Community legislation; and supports the Government's approach to securing practical and proportionate legislation that promotes the environmentally safe storage of carbon dioxide.—[Malcolm Wicks.]
5.25 pm
Charles Hendry: We have had a useful exchange. We have covered a lot of ground and have a clearer understanding of what the Government’s approach is going to be and how they will carry matters forward. As far as we can see, their approach to the paper is sound. We share their reservations, so we will not seek to divide the Committee on this matter. However, these issues need to be seen against the background of the Government’s approach to CCS, about which we have concerns. Have such concerns been expressed during the Minister’s discussions with other European countries?
The Minister talked about the cost of carbon as €40 per tonne, but the chairman of Shell has said that it might cost €75 or more per tonne to make CCS viable, when driven by the carbon price alone. Clearly, difficult decisions will have to be made. Does the Minister believe that the key driver will be the carbon price, or does he believe that the United Kingdom might also need a floor price for carbon to drive the project forward?
I should like to hear more from the Minister about international co-operation. Jeroen van der Veer, the chief executive of Shell, has said that he can see two different approaches to this issue—what he calls the scramble approach and the blueprint approach. With the scramble approach, each country does what is in its short-term interests and we end up with chaos. With the blueprint approach, countries work together to share technology and expertise to promote a sensible approach. I am concerned that there is an element of machismo here, and that the Minister is keen for Britain to be seen to be leading, whereas we might achieve more if more were done through international co-operation.
That attitude is evident in the approach that has been taken to the pilot scheme. The Minister will be well aware that we think it would be a mistake to rule out pre-combustion technology. There is fantastic potential for that 21st century technology—post-combustion technology is essentially a 19th century technology. It is a shame that we have ruled that out, because it has resulted in the BP project at Peterhead being closed down, and BP is now developing the same concept in Abu Dhabi. Britain was, but is no longer, leading in that area. It has also meant that the ConocoPhillips project on Teesside, which would have gasified coal without burning it, has been put on hold because it cannot compete under the pilot scheme.
Some exciting technologies have been pushed to the sidelines because the Government have ruled out one element. The Minister tells us that that is because he wants to open up opportunities to sell technology to China, but it will be interesting to see whether the Chinese will adhere to patents or simply build one construction and copy it. They are rather good at doing that. Perhaps our competitors—other countries—will say to China, “We will develop this technology for you in China at one of your power stations.” They could have it up and running by next Tuesday, with results a fortnight later, while we would still be six years off. The Chinese would be much more inclined to take technology that has been developed there. That demonstrates the extent to which international co-operation is crucial. I share the view of the hon. Member for Luton, North that energy policy should be a retained power, but when there is a clear international dimension, co-operation within the European Union is important.
I was intrigued by the Minister’s response to my question about whether the Government would consent to power stations that do not include CCS. There is profound anxiety among the public and certainly among environmental groups about consent being given for new power stations without a requirement for CCS to be involved. I would be interested to know whether the Minister has had discussions with his European counterparts about the Californian approach of capping the level of permissible emissions, and whether consideration is being given either here or in Europe more generally to taking something from the California experiment and applying it here. The Liberal Democrats raised that issue in the Energy Bill Committee.
Malcolm Wicks: Is that not what the emissions trading scheme does? It is a cap-and-trade scheme. Surely that is its importance.
Charles Hendry: The approach in California has been to set a much lower level of emissions than is envisaged under the European ETS. Gradually, over 20, 30 or 40 years, we might get down to that lower level, but the approach that has been taken in California is to say that coal-fired power stations must get their emissions down to something equivalent to that of gas-fired power stations, and that can be done only with capture technologies. Such action would drive the process much faster and much more productively.
The report raises some interesting issues, which we have had a chance to debate, but we are missing out on areas where international co-operation could help. It would drive the process forward more rapidly and would enable Europe as a whole to take a lead in this matter. My concern is that we are wedding ourselves to an old technology, and although we may master how CCS can work for post-combustion technology, other countries will have moved ahead of us through international co-operation.
In general, we think that the Government’s approach has been sensible where they are looking for revisions, but there are many more questions about their approach to CCS that still need to be resolved.
5.32 pm
Steve Webb: An intriguing role reversal has taken place at this point in the debate. Ordinarily, in a gathering like this, the Liberal Democrat would be the internationalist and the Conservative would be the nationalist, or the person less inclined to seek a European solution to a problem. It is intriguing that we have swapped roles. My feeling is that the European Union’s response to carbon capture has been rather disappointing. To compare it with the proposals a year ago, the idea of mandatory CCS by 2020 has been dropped, and the idea of mandatory retrofitting appears to have been dropped or put on hold.
I find the lack of progress at an EU level—specifically on CCS, not on emissions trading in the broader sense—quite dismaying. Notwithstanding some of the criticisms that the hon. Member for Wealden made of how the UK has gone about introducing the technology, I am glad that it is at least advancing—I hesitate to use the expression “cracking on”—rather than waiting for 27 countries to agree to something that risks being reduced to the lowest common denominator, given the conflicting interests of the different member states.
Charles Hendry: I specifically spoke about international co-operation. That did not necessarily mean that efforts had to be co-ordinated through the European Commission or involve all 27 countries, but that the expertise of the countries that have the greatest knowledge of such issues should be shared and that we should work together on them. Progress does not have to be driven through or by the EU.
Steve Webb: I understand that point. It is envisaged within the EU, as I believe the Minister said in his introductory remarks, that there will be knowledge exchange and so on, which is obviously good. In fact, there is a UK-China joint project on some of these issues. Perhaps we could hear a little more about it from the Minister than we heard when we last quizzed him a few weeks ago.
It is worth setting the context. The hon. Gentleman rightly mentioned Kingsnorth as an example of a potential new coal-fired power station. If CCS of the sort that we are discussing is not put in place, the emissions from Kingsnorth would wipe out the entire emissions savings from all the wind farms currently operating in the UK. That is the scale of the problem that we are trying to deal with.
Coal is responsible for about one quarter of Europe’s CO2 emissions—more than double the emissions from cars. That indicates the scale of the problem and the importance of getting this right. In the UK, one third or so of our electricity comes from coal. In Germany, it is one half, and in Poland it is 94 per cent. That points to the different interests of the member states, but, critically, from the point of view of this debate and the importance of this technology being adopted worldwide, in America it is 50 per cent., in India it is 70 per cent. and in China it is 80 per cent. That is why it is vital that we get on with this technology.
I should be interested to hear the Minister’s comments on a report, of which he will be aware, published in the past week by a wide spectrum of environmental groups dissing carbon capture and storage as a technology. The logic in that report appears to be that money spent on CCS crowds out investment in renewables and embeds coal when we could try to avoid doing so. However, my sense is that, even if the United Kingdom decided to abandon coal, the rest of the world sure as heck would not. Therefore it is vital that we make CCS work. Will the Minister reflect on his response to the criticisms that have been made of CCS and try to get inside that a little bit?
I am interested to hear the UK Government’s views in respect of a couple of proposals advanced by Members of the European Parliament. Chris Davies’s first proposal, which he will table as an amendment, is that no new fossil fuel power stations without CCS should be approved after 2015. I should be interested in the UK Government’s approach to that. His second proposal is about mandatory retrofitting of CCS by 2025. I have to say that 2025 seems an awfully long way away, given the scale and urgency of the problem. However, I can see why that is so, given that it is about getting all the countries to agree to something. Will the Minister support what seem to be quite limited attempts to set deadlines and get things moving on the implementation of CCS for new plants and existing plants?
Drawing the threads together, I shall quote a couple of sentences from Chris Davies’s remarks to the European Parliament on CCS:
“CCS can buy us time to develop a wide range of zero carbon power technologies. We need all the time we can get, and we need to accelerate the development of CCS in order to win it for us.”
The document before us paves the way and provides a regulatory framework for storage, which we need. The Minister says that, in a way, he wishes that the UK was not out ahead. Is he happy that the UK Government, in their engagement with their European partners, is expending political capital to drive forward CCS in other countries and here more rapidly than has been the case so far? If they are doing that, it does not appear to be working. Can more be done?
5.37 pm
Kelvin Hopkins: It is a pleasure to follow good speeches. On the points made by the hon. Member for Northavon, I am concerned about internationalising the drive for CCS. It is right that we address this matter internationally, because there is a vast amount of coal generation in China, among other things. However, CCS involves a cost on energy production. Some countries, which are either authoritarian or backward, with rather unprincipled private producers, will not be interested in the altruistic process of installing CCS and producing green energy. It is important that they are persuaded or told one way or another to do that for the sake of all of us. One only has to consider logging in Indonesia, for example, where there is a lack of concern about the future of the world. Brazil is starting to take that matter more seriously now, but in Indonesia whole islands have been stripped of their trees. It may take countries that do not have our approach to politics a long time to adjust to a sense of worldwide responsibility.
The great thing about democracies such as ours is that people are well off enough to think about such issues and campaign about them. There is strong green campaigning in all parties these days—we are all aware of the problems—but other countries do not yet have those drives and democratic traditions and do not have the wealth. People who are less well off cannot be lectured about doing the right thing when they are so poor that they have to use every penny to survive. When one is relatively affluent, as we are, one can be more altruistic.
One has to look at the rest of the world, not just at Britain. It is great that our Government are being positive about CCS. One hopes that that can be communicated to other countries and that we can prepare for China and other vast countries in which there is an enormous amount of fossil fuel energy generation to take it seriously in the not-too-distant future. I hope that my hon. Friend the Minister will respond positively to some of what I said.
5.40 pm
Malcolm Wicks: I will try not to delay colleagues much longer because we have had a full debate.
I was surprised that the hon. Member for Wealden thought that my position on the measure was exercising machismo, partly because I am a soft London boy at heart. The hon. Member for Northavon came to my aid by quoting what I said earlier, that I rather wish that we were not out in front internationally, because we need a lot of countries to do similar things.
Let me briefly detail what we are doing on the international scene. We support the EU’s ambition to have up to 12 demonstration projects operational in Europe by 2015. We are also working with G8 counterparts to achieve an ambitious CCS agreement for G8 summit, including seeking support for a commitment to get 20 commercial-scale demonstration projects operational throughout the world. The UK is leading the EU-China near-zero emissions coal initiative. Indeed, China is keen to move quickly and to have a large-scale demonstration project running by 2014.
We created the North Sea Basin Task Force to work closely with Norway to remove barriers to the deployment of CCS and to look at storage in the North sea. The Netherlands has recently joined. We are active participants in key international bodies, such as the carbon sequestration leadership forum. I mentioned the meeting that we held informally with several nations—more than a handful—in Rome at the international energy forum. The UK has supported capacity-building activities in developing countries with workshops in China, India and Africa, as requested by the UN framework convention on climate change. We are active internationally.
I shall not comment in detail on the recent Greenpeace report. I am advised that many non-governmental organisations did not sign up to it, not least because of its many inaccuracies. For people to call themselves green and turn their backs on CCS because they do not like coal is an act of juvenile delinquency, and I am distressed at the way in which some—not most—so-called green groups are turning their backs on some of the key technologies that will help us to get on the right side of the global warming issue.
Steve Webb: May I take the Minister back to what the Government are doing internationally? He mentioned the UK-China near-zero coal emissions project, which has been raised before. I get the slight sense that the Minister is not wholly engaged with it or that he is the world’s leading authority on it. Is it a piddling little thing or the big important thing? Has he been there, does he know about it and does he wake up thinking about it in the morning? Can he tell us more about it? What is it?
Malcolm Wicks: I worry about my carbon footprint, which is not terribly impressive, and I have not actually been there myself, although I hope to in future. Let me write to the hon. Gentleman about the matter. I was reporting the enthusiasm of the Chinese to move forward on it, but that was a fair question and I shall give him a proper answer.
My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will push for a swift passage of the directive through negotiations. I am confident that he will secure a directive that balances the need to ensure that CO2 will be stored safely and reliably with the need to avoid unnecessary and burdensome technical requirements that will not improve reliability or safety.
We have had a useful debate. I have done my best to answer questions, but if I have failed, I shall write to hon. Members. I hope that the Committee will resolve the motion, which I of course remember in great detail. I hope that the Committee accepts it.
Question put and agreed to.
Resolved,
That the Committee takes note of European Union Document No. 5835/08 and Addenda 1 and 2; notes its objective of removing legislative barriers to the geological storage of carbon dioxide in existing Community legislation; and supports the Government's approach to securing practical and proportionate legislation that promotes the environmentally safe storage of carbon dioxide.
Committee rose at sixteen minutes to Six o’clock.
 
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