Clause
20
Content
of licences: regulations
Question proposed, That
the clause stand part of the
Bill.
The
Chairman:
With this it will be convenient to discuss new
clause 7— Carbon capture
competitions
—
‘In any competitive process relating to
carbon capture initiated by the Secretary of State, equal status shall
be given to all carbon capture
technologies.’
Malcolm
Wicks:
I was so busy listening to you, Mr.
Amess, I did not understand that this meant that I should now speak. I
am enjoying this dialogue so I am looking forward to other people
having the opportunity to
speak.
Clause 20
allows the Secretary of State to make regulations prescribing the terms
and conditions that must be included in licences. It is necessary to
have this power to make regulations prescribing the contents of
licences for several reasons. For example, it will allow the Secretary
of State to specify the minimum provisions that must be included in
every licence, and whether they are to be issued by the Secretary of
State himself or herself or another authority to which the licensing
function has been transferred under clause 33, as we discussed
previously, thus ensuring that the key standards and conditions are
contained in all licences. Moreover, this power will allow specific
provisions prescribed by EU legislation or international guidance to be
incorporated in all
licences.
Steve
Webb:
I would like to address my remarks to new clause 7,
which is a very simple one. It says that where there is a competitive
process related to carbon capture, the Secretary of State’s
approach should be technology-neutral. That is what we are driving at.
I anticipate that the Minister will accept our amendment because of
something he said earlier this morning. When he was talking about
alternative strategies for carbon reduction, he said that choice of
technology is a matter for companies to determine. I wrote it down as
quickly as I could and the record will bear me out, but perhaps the
Minister will correct me if am misquoting him. He said that in the
context of the energy mix and the best strategy for reducing CO 2
and I agree with him.
That is consistent with our new
clause, which says that there are three main approaches to carbon
capture and storage. The hon. Member for Bolton, South-East ran through
this so I will not go over it again at any length, but we have talked
quite a lot about post-combustion technology and
pre-combustion technology, and rather less interestingly—I would
be interested to hear the Minister’s view on this—about
oxyfuel combustion, in which the fuel is burnt in oxygen rather than
air.
12.15
pm
It seems to us
that there are three possible technologies that could have been a
source of competition and a range of approaches that the Government
could have taken. One is that they could have said, “Our goal is
reducing CO2 emissions through some method of carbon
capture. We will therefore invite submissions from anybody who can do
this by any means. We will evaluate them against each other—both
within technologies and between technologies—and the one that
seems to give us the most bang for our buck is the one we will go
for”.
Therefore, there is a
one-competition approach. The Minister, in his gently mocking manner,
suggested that we were calling for four or five competitions. There is
a
one-competition answer to this, which is simply that, if public money is
to be spent and the Government feel that they do not have the money for
more than one technology, at the very least different technologies will
be allowed to compete against one another—and may the best
carbon capturer win. That would have been one way.
Another way, as we suggested at the previous sitting of the Committee,
would have been to have had separate competitions for the different
technologies. If the Minister’s argument, as I understand it, is
that, like oranges and apples, they cannot be compared, then perhaps
there could have been separate competitions. We have suggested that
what Ofgem regards as the windfall profits of the energy companies
might have been a source of revenue to fund additional competitions. We
are not prescriptive about it but, given the importance of the matter,
it might have been a better way of doing things.
The Minister has said
that this is potentially one of 12 EU-wide demonstration projects. To
be fair to him, the Government deserve some credit for trying to take
the process forward. I hope that he will update the Committee on where
he thinks the other 11 are up to. The Minister shrugs his shoulders
worryingly.
Malcolm
Wicks:
It is hard enough being a Minister of State in the
UK without being responsible for all the other
nations.
Steve
Webb:
There is a serious reason that I ask the question.
Are the Government confident, first, that those other schemes are going
to come forward at all, and secondly, that they will cover the diverse
range of technologies? With the Government having decided to be
technology-specific—which we are not happy about—the
purpose of our new clause is to make sure that the other technologies
are tested in the other demonstration projects.
I hope that the Minister is
doing more than just shrugging his shoulders. I hope that when he talks
in his fluent Polish, or whatever, to his European counterparts, he is
saying to them, “How about getting on with your projects and how
about these other technologies being looked at?” The Government
have locked the UK in for one demonstration project on one technology,
but are they using their influence, such as it is, with our EU
partners, to ensure that in the 12 we are at least trying to ameliorate
the problem we have created for ourselves by ensuring that other
demonstration projects test other
technologies?
Dr.
Ladyman:
I am slightly worried that the hon.
Gentleman’s new clause will have the perverse effect, which I do
not think that he intends, whereby the Government will be required to
give equal weighting to different technologies. Therefore, even if the
UK becomes expert in one particular technology and other countries
become experts in a different technology, we would not be allowed to
favour those technologies that the UK has become expert
in.
Steve
Webb:
I understand the hon. Gentleman’s point, but
it is not true of the new clause, because it refers to
competitive processes initiated by the Secretary of State—now
and at the start of the process
when expertise is in short supply. If, at a later stage, we get very
good at a particular technology, nothing in the new clause would
prevent the UK Government from favouring it, because the
Government’s approach to such technologies would not necessarily
involve a competitive process. The new clause relates to the
competitive process now being initiated in this
country.
Dr.
Ladyman:
Were the new clause to have the
interpretation that the hon. Gentleman has suggested, it would need
some sort of sunset clause whereby the Government would only have to be
even-handed about such matters up to a certain point. After that point,
the Government would not have to be even-handed. As it stands, they
would be required to be even-handed for
ever.
Steve
Webb:
Were the Minister to say that he accepts the
principle, but it must end at some point, I could live with that. I am
not too worried about the principle applying for ever. The new clause
does not bind any non-competitive process—it refers only to
competitions, and its title is “Carbon capture
competitions”. In my judgment, it does not cover the much wider
range of issues such as future Government incentives for carbon
capture, but if the only problem with the new clause is that it needs a
sunset clause, I am happy to accept that further
amendment.
The
worry is the impact that the Government’s decision to favour one
technology has had on the technology that is out there. Time scales are
terribly important, as the Minister would accept. My understanding is
that the EU 12 projects have to be in place and with results by
2015—I believe that that is the date that has been given. But
the DBERR website says that the competition that it has set up requires
something to be in place by 2014. I looked at the website this morning
and I think that that is right, but it would be helpful if the Minister
could clarify why that is the
case.
We have to refer
to the expert evidence that we were given from the director of the
Carbon Capture and Storage Association at the start of our process. We
might say, “He would say this, wouldn’t he,” but
he is pretty knowledgeable about the subject. He referred to four
pre-combustion products and, at column 100, said that they were
all
“on a go-slow
now.”——[Official Report, Energy Public Bill
Committee, 19 February 2008; c.
100.]
Does the Minister accept
that the consequence of his decision to be technology-specific has been
to undermine several other projects that are actually up and running,
because that is clearly the view of the industry?
The witness, Dr. Chapman, said
to us that pre-combustion technology is very important. I think that
the hon. Member for Bolton, South-East reminded us that we talk about
the hydrogen economy—we have all used that expression in
speeches about the dim and distant future—but here and now we
have a by-product of pre-combustion technology that is a source of
hydrogen, which could help to fuel the hydrogen economy. If not through
that route, how does the Minister envisage the hydrogen economy getting
going?
Dr. Chapman
said
“This—
pre-combustion
technology—
will be the most efficient way to make
hydrogen in the future, and with carbon capture and storage, there will
be clean energy using hydrogen as a vector. That is very important for
pre-combustion technology; it is a very important place, and we in the
UK need to be there.”——[Official Report, Energy
Public Bill Committee, 19 February 2008; c.
100. Q193]
But his view is that the
selection of a technology has potentially undermined something very
important.
Malcolm
Wicks:
When we discussed this previously, I spoke, as I
will when I contribute to the debate later today, about the application
of post-combustion technology to the situation in China. I have raised
that issue with the Committee and the hon. Member for Northavon before.
Has he factored into his analysis the pros and cons of pre and
post-combustion when it comes to the real challenge of coal-fired power
stations and the consequently huge emissions in
China?
Steve
Webb:
The Minister makes a perfectly fair point—I
have been perfectly happy to accept that on the record in the
past—but he was happy to admit to the Committee that we are
talking about the expenditure of hundreds of millions of pounds of
taxpayers’ money. My question to him is, where is the
cost-benefit analysis of the different sorts of carbon capture
technology that has led the Government to pick one? They have made a
big decision, which will have implications for years to come, on the
technology used for carbon
capture.
The Minister
implies that the Government have—and I hope that they
have—weighed up the pros and cons of the different technologies.
Will he place in the Library a copy of the document in which they did
that? Have they looked at all three? Have they looked at how long it
might take? Have they tried to put some sort of value on the potential
for retrofitting Chinese coal-fired power stations, as against the
potential of a hydrogen economy if we have pre-combustion technology?
Surely, if the Government have taken a decision to favour one over
another, it has been based on a coherent, rational, structured
cost-benefit analysis, which the Minister will place in the Library at
our request. I certainly hope
so.
Dr.
Iddon:
The analysis that the Science and Technology
Committee were aware of and which the Government responded to on 27
April 2006 is the so-called MARKAL modelling analysis. As far as I am
aware, unless there is some more recent data or analysis, that is what
the Government based the choice of post versus pre-carbon capture
technology on. However, as the Government said in their answer to the
Science and Technology Committee’s
report:
“Subsequently
some generators have indicated that the cost balance between
refurbishment and new build is closer than implied by the MARKAL
analysis, which did not take account of lost revenue during the
refurbishment shutdown and space limitations at some
sites.”
That means that
on some generator sites there is not room to build a pre-capture plant
or to fit retrospectively post-carbon capture technology. Space
limitation is one issue, but the other is that to fit retrospective
post-carbon capture technology, the plant
has to be shut down for a considerable period. I ask the Minister, why
was that not included in the MARKAL analysis? It would probably have
altered the balance between pre and post-capture
technology.
Steve
Webb:
I am grateful for that well-informed intervention.
That is the kind of analysis that I hope that the Minister will place
in the Library: the analysis that the Department has done for all three
technologies, taking into account not just the range of costs and
benefits, which might be of a more commercial nature, as the hon.
Gentleman suggests, but wider matters. As an economist, I struggle to
think how one can put a cash value on the benefit of facilitating the
hydrogen economy, but that appears to be a potential benefit of one of
the technologies. Have the Government done that? My sense is that they
have not. They have had a think about it, they have looked at some of
the papers, which the hon. Gentleman gave, and they have taken a punt
on one technology. The Minister is shaking his head. It would be nice
to think that there is a comprehensive, rigorous and thorough analysis
of the costs and benefits of the three technologies and that he will
publish that analysis so that we can look at
it.
Malcolm
Wicks:
Let me press the hon. Gentleman on this
point. This is an extremely complex field. I think that he was
conceding that although it is an interesting and intellectually
stimulating debating point to say, “Here is a technology that
can produce a hydrogen economy. Here is another one. Let’s do a
cost-benefit analysis, ” that could not, I suspect, be done in
great detail. In any case, one would want to factor into the analysis
that others are developing hydrogen technologies; there is a lot of
interest in that in the United States. With respect, he is dodging my
point about China. We know the rate at which the Chinese are building
coal-fired power stations to fuel their economy. I am advised that it
is post-combustion technology that could be retrofitted there. Given
the huge carbon emissions from China in the future, is he really
quarrelling with the advice that I have received that, as we had to
choose one technology, post-combustion was the
best?
Steve
Webb:
I am querying the Minister’s premise that we
had to choose one technology—that we had to pre-select. That is
the fundamental point. It may be that a competitive process with a
proper evaluation of what the Minister calls the pros and cons would
have resulted, if there was to be a single project, in a
post-combustion project. That may have been the outcome, but
pre-empting the outcome in the way that the Minister has seems to be
the problem. He implies that the Government could not do a cost-benefit
analysis, so I am trying to work out what they did do. Has he weighed
up the costs from the go-slow on the four pre-combustion projects,
which he has undermined by picking a different technology? Surely, just
as I should take account of the potential benefits of retrofitting
Chinese coal-fired power stations, the Minister should take account of
the costs of undermining commercial projects to develop alternative
technology. That has been the impact of his decision.
Our argument
is that if we are to have one competition, the Government should not
pre-empt its outcome by picking a technology. The Minister was right
when he said to the Committee this morning that the technology was a
matter for the companies not for the Government; the Government should
set the framework, enable the competing technologies to compete and
show which is the best across the board. My concern is that by picking
a winner, as it were, the Government have undermined other valuable
technologies that could have been well worth looking
at.
Charles
Hendry:
This has been a very interesting and useful
exchange so far. I agree with the hon. Gentleman’s analysis of
the Government’s pilot project and the fact that the Government
have made a mistake in the way that they have gone about it. However, I
do not believe that his new clause is the right solution, because to go
down the route of stopping the Minister deciding on the right type of
technology in future competitions is too
prescriptive.
12.30
pm
The hon. Member
for South Thanet put his finger on the key issue. The perverse
consequence of this new clause would actually make it more difficult
for us to encourage areas where the technologies might best be explored
further. If we make good progress with the post-combustion project that
the Government are supporting and then in a few years the Government
decide to launch another project to see whether they could bring
pre-combustion technology up to the same status, this new clause would
make that illegal. It would mean that they could not say “We now
want to do a pre-combustion project”, because this new clause
says that equal status should now be given to all carbon-capture
technologies. It would end up being counter-productive and we would
need a new Act of Parliament to allow the Government to put in place a
competition for one type of
technology.
The
Minister asked last week if the Liberal Democrats wanted two, three,
four, five different projects to run at the same time. With respect, he
asked the wrong question—that was always Ted Heath’s
response on “Newsnight” when he was asked a question he
did not like. He would say “With respect, Mr. Paxman,
you are asking me the wrong question” and he would answer the
question he would have liked to have been asked. The Minister has asked
the wrong question because rather than going alone on this issue, this
should have been a genuinely international exercise. The UK should be
part of an international consortium trying to develop post-combustion
carbon capture and storage and also be part of an international
consortium trying to develop pre-combustion carbon capture and storage.
We would then find that there would be reduced costs for us as part of
that process and we could genuinely compare the benefits that could be
derived from different
technologies.
It goes
back to what the chairman of Shell was saying about going for a
“blueprint approach” to this rather than a
“scramble approach”. It is a matter for concern that the
Minister does not actually know what the other 11 projects in Europe
are going to be about. He would not necessarily need
a detailed understanding
of all 11, but even if he knew what two or three of them were, it would
be helpful. We should be looking to co-operate on these issues, rather
than Britain trying to go it alone because we want to secure an
international lead in these
areas.
Malcolm
Wicks:
The earlier shrug of my shoulders—I do not
know how a shrug is recorded in Hansard—was because I
really wish there were 11 other projects I could detail to the
Committee. We are ahead on this and, at one level, I am proud of that
but, at another level, I am frustrated because we need to bring the
European target of 12 into the real world. It will be our endeavour in
the European Union to encourage that. I am unable, I fear, to detail
even three or four because, as far as I know, the details of three or
four are not actually there. We are, sadly, very far ahead, together
with our colleagues in Norway who, while being close partners, are not
actually members of the European Union. That is the
reality.
Charles
Hendry:
I am grateful to the Minister, but I think this is
an issue, above almost any of the others we have discussed, where
international co-operation would have been sensible. We should have
been looking at the technologies being developed in different parts of
the world and we should have been co-operating on a post-combustion
project in one area and a pre-combustion project somewhere else so that
we could genuinely evaluate
them.
The Minister
asked on two interventions about the situation in China. To go to China
and be able to say “We have mastered pre-combustion technology
so please, in future, with your coal-fired power stations every week,
look at doing it on a pre-combustion basis rather than a
post-combustion basis” would have been a fantastic opportunity.
So on both sides of this technology, there were major
international opportunities for Britain in terms of trade and there
were major opportunities for British science and British genius. We
have narrowed things down in a way that is regrettable. My concern
about the new clause is that, when we want to reconsider the issue and
to have a project whereby pre-combustion could be made to work more
effectively and be mastered, it would rule it
out.
Paddy
Tipping:
The new clause has real relevance to my
constituents and those who work in the coal industry at Welbeck and
Thorsby collieries in Nottinghamshire. Those miners are the most
efficient in Europe and have reduced costs. Burning coal is important
economically as is getting the cost right to enter the market. It is
important to burn coal in an environmentally sensitive way, which is
what the new clause
covers.
I understand
that generators in the United Kingdom wish to replace some coal-fired
power stations with new coal-fired power stations. When I last looked
at matters, there were about a dozen propositions for new coal-fired
power stations. To meet our environmental concerns and worries about
carbon, those new coal plants must be more efficient and effective than
they are at present. That is the substance of the new clause and our
debate about carbon capture and storage, and the technologies that we
need to introduce.
The matter is important
nationally as well as internationally. As the Committee has recognised,
in terms of the environment, it does not matter where a tonne of carbon
is produced because it is still the same pollutant wherever it is. If
we can therefore influence new design and new build in China and India,
that will be important and significant.
The hon. Member for Northavon
made a number of points, such as that clean coal demonstration plant
post-combustion will clearly not be sufficient. The EU aspires to a
dozen such plants and it makes sense, as the hon. Member for Wealden
has just said, to have a real and meaningful discussion within the EU.
I accept that the Government are in the lead, but there needs to be a
realistic, rational discussion about using the 12 projects throughout
the EU to develop other forms of clean coal
technology—pre-combustion or
post-combustion.
A lot
of discussion has taken place about China. The Minister will know more
about such matters than I do, but I remind the Committee that a new
coal power station is being built in China at the moment with financial
support from the EU. We are involved in the partnership to which the
hon. Member for Wealden referred, and we need to do more of that
because, if it is right that carbon capture and storage is a real new
technology for the future, we must demonstrate it and bring forward the
right sort of technology.
I am sceptical about carbon
capture and storage; it has not been done yet. We can do it in the
laboratory and we can do small-scale plants, but building a plant and
making the science work is a big leap. I am not confident that we can
do that in the time frame that is talked about, so it is important that
we investigate as many technologies as
possible.
Generators
know that they must replace plant and generators know of the
opportunities overseas. It is recognised that they are big
international companies, such as RWE, E.ON and EDF Energy. None of them
is British-based; they are European companies that operate
internationally. They are not scot-free in respect of such issues. They
recognise that coal has a place in the future, so they must invest,
too. There is a rose-glassed view from the generators that the
Government will take the total cost of clean coal technology, and
carbon capture and storage. If the generators have an eye to the
future, they should use their own profits, balance sheets and ability
to borrow to go forward and be active partners. I should like to see
the plea accepted that there be more than one demonstration plant in
the UK. However, let us be realistic—that will not
happen.
Companies such
as Centrica, which last week announced enormous profits, must know that
to invest in the future and to survive, they, too, have to invest in
the new technologies, such as carbon capture and storage and clean coal
technologies. It is not just a matter for the Government, but a
challenge for us all. We need to set up partnership arrangements in the
UK and internationally to ensure that that
happens.
Dr.
Iddon:
I will try to be brief. I do not envy the Minister
or his advisers in setting up competition in this area because of the
difficulties involved. First,
there is pre-combustion or post-combustion capture of carbon dioxide.
Secondly, there are gas and coal-fired power stations and possibly also
oil, although that is unlikely. Thirdly, there is the difficulty of
transporting the carbon dioxide after its
capture.
Obviously,
transporting carbon dioxide to the Scottish coast from the east or west
midlands where some of the generators are will be far more costly than
what BP was proposing, which was to build a gas-fired plant at
Peterhead pretty much adjacent to the oil wells down which the carbon
dioxide would be pumped. I have mentioned that one difficulty with the
MARKAL analysis for post-combustion capture of carbon dioxide was that
it did not appear to take into account the downtime of the plant while
the retrofitting took place. I doubt that it has, but I wonder whether
the MARKAL analysis has taken into consideration the length of
transportation for the carbon dioxide from the point of capture to the
oil wells off the Scottish coast. That will complicate the cost
analysis extremely.
I
wonder whether the transport of carbon dioxide is possible at the
moment without putting new infrastructure in place. When we did the
analysis, the assumption was that some of the gas lines that transport
gas from the sea would become available because of the running down of
gas provision from the North sea field and that those could be
converted to transport carbon dioxide up the country to the very wells
from which gas had been coming down the country to the
consumers—whether they were generators or domestic
consumers.
This is a
terribly complex business and I do not envy the civil servants or their
advisers in reaching a conclusion. In conclusion, I ask the Minister
how many of those difficulties have been taken into account while he
has been led to the judgment between post-combustion and pre-combustion
carbon
capture.
Malcolm
Wicks:
Again, this has been a very useful debate. I
listened with great interest to my hon. Friend the Member for Bolton,
South-East and I am grateful to my hon. Friend the Member for Sherwood
for giving us a timely reality check on where we are in terms of this
technology. I mentioned on another occasion that although there is some
excitement about the bidding process and whether we should build two,
three or four and whether they should be pre-combustion or
post-combustion, those discussions are often not very financially
literate. My hon. Friend the Member for Sherwood has given us the
reality check that the whole chemistry set, as I think of it, has not
yet been tried. Our demonstration project will be one of the
first.
I will try to
deal with many of the points that have been raised but, first, I remind
the Committee that the Bill provides an enabling framework that will
allow the safe storage of carbon dioxide offshore, paving the way for
the wider deployment of carbon capture technologies. As such, it does
not make provision for Government competitions or for CO 2
storage demonstrations and it does not regulate the types of
technologies that may be deployed via such competitions or the activity
of carbon capture at all, as opposed to the activity of storage. In
other words, the provisions in the Bill are technology-neutral for
offshore carbon dioxide storage and for carbon dioxide
capture. I hope that that gives comfort to those who are in favour of
one technology rather than another. I sometimes think that in a
parallel world there might be a Government who have chosen
pre-combustion storage, and I can now see the hon. Member for Northavon
in that parallel world arguing passionately about the importance of
post-combustion and how outrageous it is that the Government have
ignored the realities in China—I jest, but only in
part.
The Government
already support a range of carbon capture technologies through a
variety of means, including a £35 million fund to encourage
industry-led demonstrations of elements that contribute towards carbon
abatement technologies, including CCS; almost £9 million for
various research projects supported by the Research Councils and the
Technology Strategy Board; and pushing for the EU ETS to take account
of CCS. The newly formed Energy Technologies Institute considers CCS as
one of its possible future technology themes. With a potential
£1 billion budget over 10 years, it is bringing together
Government and some of the world’s biggest companies, with a
view to accelerating the development of low-carbon energy technologies
towards commercial
deployment.
12.45
pm
All those
initiatives give equal status to all carbon capture technologies,
exactly as the hon. Member for Northavon and perhaps other hon. Members
have specified. I hope that he and the hon. Member for Cheltenham
accept that the Government see CCS as a priority and are showing global
leadership in facilitating its demonstration and
deployment.
The only
area in which the Government have made a deliberate choice regarding a
capture technology relates to our competition for a demonstration
project, and there are powerful reasons for having done so. The
potential contribution that CCS technologies can make to tackling
global climate change is significant. The Stern review estimates that
CCS would contribute up to 28 per cent. of the global CO2
reductions that are needed by 2050 if the aim of restricting
temperature increases to 2° C is to be achieved. We must remain
focused on CCS as a global solution to climate change. For CCS to be
deployed on such a scale, the technology first needs to be demonstrated
on a commercial scale. That is why the Government are supporting one of
the world’s first projects demonstrating the full chain of CCS
technology in relation to a commercial-scale power
station.
We considered
carefully whether it was possible to run a competition that was open to
all technologies, but we concluded that to run a fair and transparent
competition, it was necessary to decide on the capture technology at
the outset. It would be difficult to develop evaluation criteria that
could fairly assess the different technologies against each
other—each has different benefits. Our decision to focus on
post-combustion capture technology in relation to a coal-fired power
station will allow us to achieve the key objective of our demonstration
project, which is to demonstrate a technology that is relevant and
transferable to global markets. We need to ensure that actions taken in
the UK can also help other countries to take steps towards tackling
their emissions.
The arguments for examining CCS
in relation to a coal plant are clear. Coal will remain a significant
part of the world’s energy mix over the next decades. The
recently published “World Energy Outlook 2007” projects
that demand for coal will increase by more than 70 per cent. over the
period from 2005 to 2030. China and India alone already account for
more than 45 per cent. of world coal use and are projected to drive
more than 80 per cent. of that increase in demand. In 2006, China built
one coal-fired 1 GW power station every four days, which is equivalent
to two new Drax 4 GW power stations every
month.
The new build
coal-fired power stations in China alone could emit about 260
megatonnes of CO2 each year, although that will depend on
the type of power station being built and the rate of build. That is
staggering when compared with total UK CO2 emissions in
2006, which were about 150 megatonnes. The ability for post-combustion
technology to be retrofitted to existing power stations enables us to
tackle such carbon dioxide emissions that would otherwise be locked in
right now through existing and planned new build power
stations.
It is
important to recognise that pre-combustion technologies are used in
conjunction with integrated gasification combined cycle power
stations—IGCC power stations. These are not yet widely deployed,
nor are they expected to be deployed for many years to come. For
example, the “World Energy Outlook 2006” report says that
between 2015 and 2030, IGCC will account for less than 20 per cent. of
new capacity to be added globally. That is why early demonstration of
post-combustion capture, which can be readily retrofitted, is so
important for tackling global carbon dioxide emissions. Although I do
not pretend to be an expert, I understand that it is far more difficult
to retrofit pre-combustion.
I am confident that we have
made the right decision in focusing the competition on post-combustion,
and stand wholeheartedly behind our decision. The focus on
post-combustion, however, is purely in the context of the competition.
We recognise that all CCS technologies have a potentially significant
role to play in helping to tackle climate change. That includes the use
of pre-combustion capture technologies, which, as the hon. Member for
Northavon said, could have an important role to play in producing
hydrogen for emission-free
transport.
In addition
to the measures I outlined at the start, we are exploring a range of
options aimed at promoting widespread deployment of all CCS
technologies and hope, as I have said on a number of occasions, that UK
companies will show the same enthusiasm and leadership in this area as
has been shown by the Government to date. I noted the comments of my
hon. Friend the Member for Sherwood on that issue of corporate and
environmental
responsibility.
The
Government have been criticised for supporting only one
commercial-scale demonstration project. Yet sponsoring one project
alone represents a significant investment of potentially several
hundreds of millions of pounds of public support, and a scale of
commitment that only two other countries in the world have made. To say
that the Government should be supporting two or three demonstrations is
simply not
realistic. We are doing more than just about any country in the world in
this area, and we should be proud of that, not
critical. The
UK truly is a global leader in this technology, but one country cannot
tackle the challenges involved in making CCS commercially deployable.
That is why, as I mentioned in the last sitting, we are working closely
with other countries such as the US and Norway—I was asked by
the hon. Member for Wealden about this—and through multilateral
institutions to encourage others to make similar commitments. Indeed, I
was discussing this with my Norwegian opposite number only a couple of
weeks ago. It is only by doing so that we can help bring about
widespread deployment within the time scales required to tackle global
climate change.
Dr.
Iddon:
I am now clear that this is coal only, and that it
will be on an existing power station, but I am still not clear about
what the competition will be based on. Will it be a cost analysis of
the different projects, and will it include or exclude the
transportation of the carbon
dioxide?
Malcolm
Wicks:
It will include the whole project: the stripping
out, in layman’s terms, of the CO 2
, the
transportation and the storage. It will have to include everything and,
indeed, frustrating though it is, we anticipate that it might take a
year or so for us to do the technical assessments required on the
different projects coming forward to us. We will be doing a full
appraisal.
Faced with
those who say that the Government have made slow progress in our
approach to CCS, I would say that the case is quite the contrary: The
decision to launch a demonstration project was taken in May 2007. The
competition to select a project was launched in November 2007, as we
promised. We expect our demonstration to be operational by 2014. Only
two other countries—Norway and the US—are currently
committed to funding similar scale projects, both of which are likely
to be operational within the same time frame. Rather than dragging our
feet, we are actually sprinting ahead and leading the
way.
Our competition
for a post-combustion commercial scale demonstration project is already
under way in line with our commitment, and would not be affected by the
new clause. The new clause would have the perhaps unintended
consequence of precluding any future competition that could be focused
on pre-combustion technology, if it was determined to be necessary,
given that the Government would have already supported the
demonstration of post-combustion. Given what Opposition Members have
said about pre-combustion, that would surely not be the intention of
the hon. Member for Northavon.
In summary, while I have
discussed issues that—
Steve
Webb:
Before the Minister sits
down—
Malcolm
Wicks:
I was about to sit down,
actually.
Steve
Webb:
He said “In
summary”.
Malcolm
Wicks:
I know, but it is quite a long summary. I am happy
to give way to the hon. Gentleman, but he will look at the clock as
much as I do.
Steve
Webb:
The one specific thing that I do not understand
about the competition, which is important in the context that we are
discussing, is if one company wins and it learns everything that there
is to know or a great deal that is of commercial value to it, is there
any onus on it to share that with everybody else, or is it private
knowledge? How does that process work? A competition with one winner
does not, potentially, disseminate the technology. How do we ensure
that the winner plays fair with everybody
else?
Malcolm
Wicks:
That is a good point, and I do not have a crisp
answer, except to say that we clearly need to balance concerns about
intellectual property rights against the more important concern of
knowledge transfer. Given all that I have said about China, knowledge
transfer is the crucial thing here.
I will not be able to address
the comments of one or two colleagues now, but I may find another
opportunity of doing so. I understand hon. Members’ frustrations
about where we are, but let us remember that, as my hon. Friend the
Member for Sherwood said, this is brand new technology; not tried, not
tested. We are ahead of the game. The Bill provides a regulatory
framework that will enable the different technologies to come to
fruition, but I make no apology for the fact that, in the demonstration
project, for a number of different reasons, we felt that we should
choose one technology. That was fair to some of the different companies
that were coming forward, because developing proposals for competition
is itself quite expensive. With that, and looking at the clock, I urge
the Committee to support the clause.
Steve
Webb:
A lot of what the Minister had to say was explaining
the case for the winner of the competition being post-combustion
technology. My point was not that there was not a strong case for that,
but that it is wrong to pre-empt it, so I am not sure that he addressed
my point.
I asked the
Minister to comment on the third technology, oxyfuel technology, which
he did not mention at all. I asked him to comment on the go-slow on
existing pre-combustion technologies, which he did not mention at all.
He said that it was difficult to assess the relative merits of
different technologies on a transparent basis, so the Government have
done it on a non-transparent basis, by simply picking one behind closed
doors. It seems that that must be inferior to inviting competing
technologies, but I take the general observation that the new clause,
without a sunset clause, might have undesirable effects. When the
relevant time comes, I will not press the new clause.
Question put and agreed
to.
Clause 20
ordered to stand part of the Bill.
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