 House of Commons |
Session 2007 - 08 Publications on the internet General Committee Debates Energy |
Energy Bill |
The Committee consisted of the following Members:Chris Shaw, Committee
Clerk
† attended the
Committee
Public Bill CommitteeTuesday 26 February 2008(Afternoon)[Mrs. Joan Humble in the Chair]Energy BillClause 21offence
to carry on unlicensed
activities
Question
proposed this day, That the clause stand part of the
Bill.
4
pm
Question
again proposed.
The
Minister for Energy (Malcolm Wicks):
Good afternoon,
Mrs. Humble, and welcome to the Chair. Later on, perhaps
this afternoon, we will come to the debate about renewables and the
renewables obligation, so we have prepared a handout that is now
available to Committee members. It will save me from giving a rather
long and pedestrian speech; it will enable me to give a short and
pedestrian speech instead. [
Interruption.
] I
always knew that the Liberal Democrats had their uses, and I am
grateful to the hon. Member for Northavon for passing out the
handout.
I
shall touch briefly on a few issues that came up this morning about
carbon capture and storage, to provide some clarification for Committee
members, before focusing on the specifics of clause 21. The hon. Member
for Northavon asked about the Government’s position on oxyfuel
technologies. He knows that oxyfuel combustion involves burning fossil
fuels in a highly oxidised environment as a means of stripping carbon
dioxide. For the purposes of the Government’s competition,
oxyfuel is included in the definition of post-combustion, and therefore
oxyfuel products will be able to enter the competition. The hon.
Gentleman raised a further issue about the go-slow on projects that
will not be able to participate in the Government-sponsored competition
for the full-scale demonstration of CCS. We are aware that several
companies were planning pre-combustion projects, but the Government
cannot sponsor all demonstrations, as I argued this morning. Sponsoring
one project alone will already represent a major investment of hundreds
of millions of pounds, so the Government have concluded that it is
important and immediate to demonstrate post-combustion on coal
technology, which is relevant to the vast majority of plants being
built now, particularly in developing economies. We recognise, however,
that different CCS technologies are likely to be valuable in helping to
tackle climate change, and we welcome and support the development and
deployment of all CCS technologies. We hope that private companies will
join us in our leadership and initiative.
My hon. Friend the Member for
Bolton, South-East asked several interesting questions about CCS.
First, he asked whether transportation costs will be considered
when assessing projects for the purpose of the demonstration. I am
advised that the Government will support up to 100 per cent. of the
additional capital and operating costs for the full chain of capture,
transport and storage of carbon dioxide. Therefore, transportation
costs will form an integral part of the evaluation of the bidding
projects.
Secondly, my
hon. Friend raised some specific and technical points about the MARKAL
economic model. For the benefit of other Committee members, I shall
provide some context to the MARKAL modelling, which was undertaken for
the 2007 Energy White Paper. The UK MARKAL macro model is one of the
few models in existence that allows us to examine how energy use in the
whole UK economy might evolve under a carbon constraint. It provides
technological detail about the entire energy system, including
electricity, heat and transportation. For the Energy White Paper, the
model was constrained to deliver the 60 per cent. reduction in carbon
dioxide emissions by 2050, which is consistent with our energy goal for
carbon emission reductions. Once the data and assumptions are fed in,
the model chooses the most cost-effective combination of technologies
throughout all sectors over time to deliver the carbon reduction goal
by 2050.
As with any
model of that type, the outcomes are necessarily based on the input
data and assumptions. In recognition of the fact that the future is
impossible to predict with any great or detailed certainty over such
long time scales, the analysis for the Energy White Paper was
undertaken for a range of scenarios and assumptions, including
different fuel prices and electricity generation cost estimates. Seven
scenarios were considered, with sensitivities explored for each
scenario. I emphasise that the model is not a predictor of the future;
rather, it can be used to help provide useful insights and inform
thinking and longer term policy making. It is only one of a range of
considerations that informs Government thinking and policy
making.
I wish to
look at the process by which the cost estimates and assumptions that
were fed into the MARKAL modelling were arrived at. It is one of the
main issues raised by my hon. Friend the Member for Bolton, South-East.
The cost estimates and assumptions were formulated following expert
peer review from both internal and external experts, including
companies engaged in power generation. Those assumptions were based on
the best available information at the time of the analysis.
Finally, the hon. Member for
St. Albans raised the issue of responsible arrangements proposed in
relation to carbon dioxide stores. I will cover those issues in greater
detail during the stand part debate for clause 30 and we will consult
on that very shortly. However, I would like to clarify one of the
points that I made this morning on the topic. While carbon dioxide is
being injected into the store, the operator will be solely and fully
responsible for that store, including any liabilities that may arise in
connection with it. Security may need to be provided to ensure that the
operator is able to comply with its obligations. Such liabilities will
continue even after the store is closed, so that for a period of time
the operator will continue to be responsible for a store that has been
closed to any further injection. That period of post-closure liability
must be sufficient to establish, on the basis of regular
monitoring and inspections, that the store is safe and
stable. Only once the licensing authority is satisfied that that is the
case would the operator’s licence be terminated, providing that
the site had been fully decommissioned in compliance with the
decommissioning programme. Upon termination of the operator’s
licence, the long-term stewardship of the store, including any
liabilities that may arise, would be managed by the Crown Estate that
will monitor the closed store for as long as necessary.
That is a clarification because
I think that in my remarks this morning, my suggestion that the
injection would finish, the store would close and it would pass to the
state was an over-simplification. I am now clarifying the matter by
talking about what I am sure hon. Members will agree is an obvious
interim period where the company maintains
responsibility.
Anne
Main (St. Albans) (Con): I thank the Minister for that
clarification. Would the reasonable period of time that he has outlined
be the same for every store that was used, or would each store be
judged on its own merits?
Malcolm
Wicks:
The hon. Lady always expects me to predict the
detailed future for an emerging technology. As I said this morning, we
are only into the first pages of chapter one on this technology and I
cannot predict the footnotes for chapter six. I am sorry, but I do not
know the answer. I guess that it might vary from licence to licence and
from store to store but until we get into greater detail and
consultation, I will not have the answer to that. Someone else may,
however, and if I change my mind about it, I will let members of the
Committee know. It will be judged on its merits once it reaches a
stable state, and whether that stable state might vary because of the
geology is only an assumption. I am grateful to the hon. Lady for
asking that question.
I now turn to the specifics of
clause 21. As I began outlining this morning, the clause makes it an
offence to carry on carbon dioxide storage activities without a
licence, and it sets maximum penalties for an offence committed under
the clause. The purpose of the clause is to ensure that any carbon
dioxide storage related operations are carried out by appropriately
licensed operators, thus minimising the potential negative effects on
the environment, health and safety or other uses of the sea. Currently,
the deposition of substances in the marine environment, including the
sea bed, is governed by provisions in part 2 of the Food and
Environmental Protection Act 1985. In the clause, we have sought to
achieve consistency with the penalty arrangements that would have
applied had the licences been issued under that Act. However, the
provisions in the clause ensure that lower penalties will apply to
exploring or building installations for the purposes of exploration
without a licence, as the environmental risks associated with such
activities are lower than those associated with
storage.
We had a
major debate on CCS this morning, and the next few clauses—up to
clause 26 or so, I think—are in many ways similar to the ones
that we discussed on gas storage. It is up to the Committee whether to
debate them, but I intend to move some of them formally. I give early
notice of that in case others would like a debate on
them.
The
Chairman:
The Minister has been helpful to the Committee
in answering questions that were asked earlier, but I remind any other
Members who wish to contribute to the debate that they should limit
their contributions to clause
21.
Question put
and agreed
to.
Clause 21
ordered to stand part of the
Bill.
Clause 22
ordered to stand part of the
Bill.
Clause 23Secretary
of state’s power of
direction
Question
proposed, That the clause stand part of the
Bill.
Charles
Hendry (Wealden) (Con): The clause seems generally fine,
but I have a question about subsection (6), on the payment of interest.
Can the Minister clarify how widespread such a provision is in
Government policy? I know that they have always stood firm against
firms being able to charge interest on the late payment of bills, and
have not been prepared to legislate to allow that, but if we do not pay
our tax on time, a statutory rate of interest applies. What is the
general principle on the payment of interest on late
payments?
Malcolm
Wicks:
I think that I had better write to the hon.
Gentleman on that if I may, or I might be able to find a way to provide
an answer later this afternoon. I want to get it absolutely
right.
Question put
and agreed
to.
Clause 23
ordered to stand part of the
Bill.
Clause 24Failure
to comply with a direction under section
23
Question
proposed, That the clause stand part of the
Bill.
Charles
Hendry:
Again, I have only a slight concern. The clause
refers to penalties both on conviction and on indictment but not to
dishonesty. It mentions due diligence, but my concern is that somebody
who has not been dishonest could face jail or an unlimited fine. Will
the Minister clarify whether the clause will apply only in cases in
which there has been an intentional act or an element of dishonesty,
without somebody who had inadvertently got themselves into the position
described in the clause also being
covered?
Malcolm
Wicks:
I would have thought that that would be the case,
but as I might write to the hon. Gentleman on his previous point, I
shall write to him on this matter as
well.
Question put
and agreed
to.
Clause 24
ordered to stand part of the Bill.
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