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conventional coal-fired power generation should only be built on the expectation that it will be retro-fitted with CCS by the early 2020s
the earliest it believes will be feasible. With the demonstrations in the UK and abroad, we will plan on the basis that CCS will be technically and economically proven by 2020. There will be an independent judge of when the technology is proven and I envisage the Environment Agency playing that role. Every coal-fired power station built from now would have to commit to retrofitting CCS on the whole plant100 per cent.within five years of 2020, subject to the technology being ready. Once the technology had been judged as proven, every new coal-fired power station would have to commit to CCS, not just on a portion, but on the whole plant.
I believe CCS will be effective and can be shown to work, but I will seek views in the consultation on whether we need a safety net if it does not become proven as quickly as we expect. We will also consult on whether, through an emissions performance standard, it is possible to implement the conditions I have outlined.
The new conditions come on top of the requirement on every power station to buy carbon permits, which under the EU emissions trading scheme are capped and falling. I believe that the funding for demonstrations and the conditions I have proposed meet the criteria I
have set out. They set us on a decisive low-carbon path, with the UK doing more than any other country to demonstrate and deploy CCS, and they are the most environmentally ambitious coal conditions of any country in the world. They protect security of supply by making possible the only sustainable long-term diversity there islow-carbon diversity.
I have received representations that there should be 100 per cent. CCS on new coal from day one, but I believe that they do not appreciate the need that still exists to demonstrate the technology before full-scale commercial deployment is possible. Such a condition would reduce the range of technologies that could be affordably demonstrated, would mean that demonstration of post-combustion CCS would be far less likely, and would fail to meet our international obligation to drive forward low-carbon technology.
By embarking on todays path to low-carbon coal, we shall be able both to meet our climate change commitments and to secure up to four new coal-fired power stations by 2020, whose operation will include the use of indigenous coal. This route to low-carbon coal is also right for the British economy, and will enable us to lead the world in carbon capture and storage. With a reliable stream of finance, we are investing in British skills so that our industries can lead CCS not just in Britain, but at power stations around the world. I hope that our industry, universities and scientists will respond to the challenge of creating a new industry in Britain.
Research suggests that CCS and other carbon abatement technologies could sustain 50,000 jobs by 2030. This is a massive regional opportunity for Britain. I pay tribute to our regional development agencies for what they are already doing on carbon capture and storage, and look forward to working with them. Teesside, the Thames Gateway, the Firth of Forth and the Humber are among the locations that could be suitable for a new CCS cluster. For our North sea oil and gas industry, CCS can herald a new low-carbon future. The 1960s and 1970s saw the development of a new North sea industry; in later decades, Britain can do the same with CCS.
The proposals that I have announced seek to combine the drive towards low carbon at home and around the world, meeting the need for security of supply, with the building of Britains industrial future. They signal that the era of unabated coal is over, but a new low-carbon future for coal with CCS can begin. I commend the statement to the House.
Greg Clark (Tunbridge Wells) (Con): I thank the Secretary of State for early sight of his statement. I know from our exchanges that he is an avid student of my policy documents, and he knows how long the Conservatives have been trying to persuade him and his predecessors to give Britain a lead in carbon capture and storage. Sadly, that leadership has now passed to China, Germany and the USA. It is two years since the Governments characteristic dithering led to the collapse of BPs CCS project at Peterhead. That work is now being done in Abu Dhabi.
A year ago, my right hon. Friend the Leader of the Opposition set out the policies on CCS that Britain should adopt: to build a network of pipes and connections that would allow captured carbon dioxide to be transported from generating plants to areas of storage in the North sea; to equip at least three new coal plants with CCS
technology, financed by Britains share of receipts from the EU emissions trading scheme; and to introduce an emissions performance standard that would limit emissions from any new plant to the equivalent of those from a modern gas-fuelled power station.
Our criteria remain those against which todays announcement must be judged, but let us be clear why the statement was so urgently needed. After 12 years, Britain's energy policy is as much of a horror show as our public finances, and for the same reason: the Government did not fix the roof when the sun was shining. We have known for more than a decade that a third of our generating capacity is to be turned off during the current decade, and that there is no remotely adequate plan to replace it with a low-carbon alternative. We have known for many years that North sea oil and gas are in decline, but our gas storage capacity is grossly inadequate. During the cold snap last February, storage dropped to just four days worth. No other major European country generates less of its electricity from renewables, although we have some of the best wind, wave and tidal resources in Europe. If anyone thinks that the Governments handling of the economy was an aberration, let them look at the mess of their energy policy. While we welcome the Secretary of States Damascene conversion to Conservative policy, it is from that appalling position that we now need to recover.
The Secretary of State will understand our need for reassurance about his intentions. Will he confirm that the new coal-fired power stations to be developed with CCS technology will be required to achieve an overall emissions performance standard of no more than 500 kg of carbon dioxide per MWh from the outset? If there is consent for four pilots, each generating 300 MW of abated electricity, that will mean the abating of 1.2 GW of new capacity by 2020. How much unabated electricity does the Secretary of State expect to be generated by those plants by that date? Is there any limit on the proportion of unabated electricity generated by them? Can we expect to see a monster new coal plant generating massively increased carbon dioxide emissions of which only a small proportion are abated by means of the measures that the Secretary of State has described?
As for the funding for the CCS clusters and the demonstration plant, will the Secretary of State explain why the Government have chosen to raise the money by means of a consumer levy rather than from EU ETS receipts? Will he tell us how much that levy will be and on which consumers it will fall, bearing in mind the burdens placed on households and firms by yesterdays Budget? Will he tell us how many clusters he expects there to be, and can he assure us that their locations will be chosen with technical viability rather than political convenience at the forefront of the considerations? Will he tell us plainly whether he will consent to new coal plants outside the cluster areas?
In yesterdays Budget speech, the Chancellor vainly tried to distract attention from the wreck of Labours economic policy with a few meagre and meek environmental proposals. If the Secretary of States conversion on CCS is genuine, I welcome it, but I sincerely hope that todays announcement does not turn out to be another example of Government greenwashing. The Secretary of State said that the Government must send a decisive signal, but much of the commitment that he has made is still subject to consultation. He has left it perilously late
to secure our energy supplies for the decade ahead and to reduce our greenhouse gas emissions, but it is absolutely vital that these decisions are finally acted on now, without delay.
Edward Miliband: I have respect for the hon. Gentleman, but I hope that when he reflects on his performance today he will reconsider his position and think hard about what policy he wants to pursue. I have to say that he gave a pretty disappointing response that did not show much understanding of the difficulties that we face.
The hon. Gentleman asked about the funding mechanism. He was right to point out that part of the challenge is finding the funding, but the problem with his proposal of using funds from the auctioning of the European carbon allowances is that that has already been accounted for in the Chancellors Budget plans. The money is not available. The hon. Gentlemans proposal constitutes an uncosted commitment to providing billions of pounds without the faintest clue about where the money will come from. He does not have the money, because it is included in the general accounts published in the Budget. It is difficult to find the necessary finance, and I pay tribute to my right hon. Friend the Chancellor for deciding that we will fund these measures. I hope that the hon. Gentleman will reflect on the means of financing them; he has no such means at his disposal.
The hon. Gentleman asked how much unabated coal there would be. Let me say to him candidly that while he can pursue his demand for 100 per cent. CCS from day oneI dealt with that in my statementI believe that it is a foolish approach. It is unaffordable, and it does not make sense in the context of a demonstration technology. It is true that 20 or 25 per cent. of the plant would be abated through CCS, and obviously we will consult on that, but I have thought hard about the matter, and I believe that we have struck the right balance between what is affordable and what is a proper way of demonstrating the technology.
We will of course consult on the level at which the emissions performance standard could be set, but I must caution the hon. Gentleman against plucking figures out of the air. I have given careful consideration to the proposal for 500 kg per MWh, and I do not think that it would necessarily be appropriate for the conditions that I have described. However, I shall be happy to engage in consultation.
We shall have more to say about clusters in the consultation document, but I believe that it will be possible to have a number of them around the country, and we will view the bids impartially. Many regions are already submitting proper bids.
I genuinely hope that we can build consensus in the House. I believe that the combination of the Chancellors announcements yesterday, the funded demonstration of CCS and my statement today represent a real step forward in security of supply and the environment. I hope that, on reflection, the hon. Gentleman will be able to give our proposals a warmer welcome.
Malcolm Wicks (Croydon, North) (Lab):
I genuinely welcome my right hon. Friends important and well-balanced statement, which has significant implications for the future of our country. I congratulate both him and the Minister of State, but, if he will forgive me, I
congratulate particularly his officials in the Department and outside experts who, contrary to what we have heard, have worked on this for a number of years and unravelled the complexities.
Would it help if the Secretary of State organised a workshop to bring Opposition Front Benchers up to speed on the complexity of the issues, the economics involved and the technical work that has been done not only in Britain but in Norway, because this is too important an issue to play politics with? Does he agree with me
Edward Miliband: I was rather enjoying my right hon. Friends contribution. I agree with all the points he made. Teach-ins were fashionable in the 1970s, but I am sure that the Opposition could benefit from a teach-in on this issue given the contribution we just heard.
I join my right hon. Friend in paying tribute to the officials who have worked on, and helped in, this incredibly complex policy area, and I also pay tribute to my right hon. Friend for the work on this issue that he did as an Energy Minister, and that he continues to do. He understands its international dimension, and I assure him that we will work with other countries to develop this technology. I have already talked to Secretary Chu, the US Energy Secretary, about how we can co-operate on our learning about CCS.
This is a step in the right direction: carbon capture is a vital technology in the transition to a lower carbon electricity-generating economy. It also has huge advantages over, for instance, nuclear, not only because it contributes to base load supply, but because it can provide variable supply, thereby tackling some of the problems of intermittency and peaks and troughs of demand.
I recognise that the Secretary of State might have had to overcome opposition from within his own Government. Last year, some of us battled against the former Minister, who has just spoken, the right hon. Member for Croydon, North (Malcolm Wicks), during the passage of the Energy Act 2008, when he fought tooth and nail against expanded competition, and I think it would be appropriate to say that we have the scars on our backs. Sadly, as a result, we have lost crucial ground to the United States, Canada, Brazil, China and others in benefiting commercially from this technology.
My first question is on funding, which the Committee on Climate Change and The Guardian seem to agree will come from a charge on the power systemin other words, on customers bills. Todays statement was, understandably, a little cagier, because is there not a risk that this will contribute to fuel poverty without cuts in income tax for the least well-off, without mandated social tariffsas suggested in the Bill proposed by my hon. Friend the Member for Somerton and Frome (Mr. Heath)and without massive investment in energy efficiency for millions of homes, as proposed by the Liberal Democrats?
My second question is about emissions performance standards. I echo many of the comments from Conservative Members and hope that the Government will now
support the private Members Bill promoted by my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy).
My third question is about the commitment to 100 per cent. retrofitting. That looks fine until we see the escape clausewhether the technology is ready. The critical question is: who bears the risk of it not being ready, the energy companies or the planet? If CCS is not ready, would a Labour Government close Kingsnorth? Unabated coal-fired power stations are the worst of all optionsworse even than seeking a derogation from the European Union to extend the life of existing gas-fired power stations for a few more years until CCS is ready. This statement and policy proposal is well intentioned, but it contains a dirty great loophole that is big enough for some of the dirtiest possible power stations to fit into.
Edward Miliband: The hon. Gentleman started off well, but slipped into the same mode as the Conservative spokesman. We certainly look forward to being in power in 2020 to be able to answer some of his questions.
We all face a problem in respect of fuel poverty, and it is best to be candid about it: there are upward pressures on prices from both the high and low-carbon futures. If we carry on with the high-carbon futureI know the hon. Gentleman does not want us to do thatdemand from China and India will force prices up, so that is no solution. We are looking at social tariffscompulsory social tariffs is one of the issuesand the answer is to act on fuel poverty at the same time as driving towards a low-carbon future. Therefore, I agree with the hon. Gentleman that we need to take additional measures on fuel poverty.
I have said that we shall consult on the emissions performance standard. I told the hon. Member for Tunbridge Wells (Greg Clark) that we need to be cautious about plucking figures out of the air about the EPS. I have set out the way in which we should demonstrate the technology, and I think we need an EPS that is appropriate for the technology. We should debate the precise figure, but I am not going to state a number today because I do not think that is a sensible way to make policy.
The technology for retrofitting needs to be proven. For us to demand that CCS must be fitted on a whole plant, it needs to work. I believe that it will work obviously, we all hope that it will workbut I also said in my statement that, importantly, we must discuss the eventuality that it does not work and whether, in that case, there should be restrictions on the operation of the plant. However, we are performing a very fine balancing act between getting coal plants builtbecause, after all, energy companies and others could say they are just going to build gasand driving towards low carbon. That is why I have set out a framework today, and I say, in the spirit of genuinely wanting co-operation, let us consult on the detail and get that right. The framework needs to last for some time, and I will want to engage in genuine dialogue with the hon. Gentleman about it.
Mr. Elliot Morley (Scunthorpe) (Lab):
I greatly welcome the statement. It sends very clear signals, and we should not underestimate the benefits that come from that in commitments. It is also balanced about what can and cannot be done at present. I am particularly pleased that my right hon. Friend mentioned regions and clusters.
While the priority must be coal, as he will know, a lot of carbon capture work is going on in, for example, the steel and the petrochemical industries. In the south Humber and Yorkshire region we have, of course, Europes biggest coal plant: Drax. Regionally, there are some very exciting proposals for clusters and network collections of CO2. On the south Humber, there is a centre for the whole low-carbon sector, particularly the offshore sector. Would my right hon. Friend be interested in meeting a delegation from our region to talk about how regions can work with the Government to achieve the outcomes we all want?
Edward Miliband: I would be delighted to do that, and I pay tribute to my right hon. Friends work on these issues. I had the privilege of receiving a presentation from Yorkshire Forward about its plans. My right hon. Friend makes the important point that carbon capture not only could apply to coal-fired power stations, but could be of use for steel and other sectors. That network could play an important role, too.
My right hon. Friend makes another important point. There are huge industrial opportunities for this countrysuch as jobsin this cluster approach. That is certainly the basis on which we will want to proceed, and we will want to work with his Select Committee again to get the details right.
Mr. John Gummer (Suffolk, Coastal) (Con): I congratulate the Secretary of State on his long-awaited and welcome statement. He understates his own contribution, however, because one of the reasons he has encountered a certain amount of scepticism from Opposition Members is that many of the measures he has announced today are those that we pressed for but which Labour Members said were impossible. Therefore, we will go on pressing him, as it seems to help him very much. Will he assure the House that he will take tough measures to make it clear to the industry, especially the generators, that this is not an easy pushthat they will have to do their best to deliver, and that they cannot get out of it when we reach 2020?
Secondly, can the right hon. Gentleman point to the precise spot in the Budget statement that refers to the emissions trading scheme, because this remarkable statement suggests that the money has already been both calculated and applied elsewhere? That is something that we did not know, and there is a big question from the green movement about whether the money might be used for purposes other than the improvement of Britains green economy.
Edward Miliband: May I say that I benefited very much from conversations with the right hon. Gentleman about these issues? His contribution to this debate has been very important. He is right that, on coal, we are moving towards a need for the right form of smart regulation to drive the right investments by energy companies. I have also benefited from my discussions with them about these issues and about getting the balance right. The EU emissions trading scheme is calculated as part of the general accounting that is done by the Government and the Treasury and is part of those overall accounts.
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