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Two years ago, I was fortunate enough to go to California specifically to look into energy efficiency, the emissions performance standard and the market mechanisms that had been used there in order to reduce carbon emissions. I was fortunate to meet a number of the key policy makers who had been involved in the
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development of that suite of policies, of which the EPS has certainly had the most important impact. I was struck then by the simplicity and effectiveness of emissions performance standards and how they have made a real change to the way in which electricity is generated in California and imported into the state. Although California has its problems, it has typically been the first to embrace several exciting and progressive policies on climate change, the environment and energy efficiency. The great attribute of the EPS is that it is a firm measure that gives clear, simple and long-term market signals that act as key drivers on innovation and efficiency, and aligns the long-term interests of investors with the over-arching objectives of driving down dangerous CO2 emissions.

When I returned to the UK and the rumblings of support from the Government for a new generation of coal-fired power stations, and with Kingsnorth coming up the political agenda, my party began urgently to explore the potential of adopting such a policy here to head off such an eventuality. The EPS is important for three reasons. The first is the impact that it would have on our own carbon emissions. The second is the message of international leadership that it sends out, and the third is that it would help to put the UK at the very forefront of the development of carbon capture and storage technology, with the creation of those green jobs that we may struggle to define but nevertheless understand to be important.

The key point about international leadership on CCS is that simply having an impact on our own emissions will not be enough, but if it can be implemented effectively and on sufficient scale, the potential impact of its introduction in the developing world on a global solution to climate change would be far greater than anything that we can do on our own. We are in a position to drive forward that agenda because of the tremendous expertise that we have in our universities and research houses, and in industry with our heritage in oil, gas and coal. We should use that positively and progressively to push this agenda forward.

All these factors convinced us that we needed to ensure that the UK would play a leading global role in the development of scalable solutions for carbon capture and storage. We therefore needed to take a clear stand and make a break with our old dirty coal past. Just before Christmas 2007, my right hon. Friend the Member for Witney (Mr. Cameron), the leader of our party, visited China and used the occasion to announce the Conservatives’ EPS policy and our ambitions should we form the next Government. It was right that he chose to make that statement in China, because nobody can be taken seriously on the issue of climate change without addressing the building of new coal-fired power stations in that country. We saw the opportunity to drive the development of CCS technology with an appropriately calibrated performance standard, backed up by serious strategic investment to support CCS pilot projects for new power stations, but on a whole new level to that anticipated by the Government.

Our endorsement and support for carbon capture was well ahead of Government thinking and, I think, ahead of most parties’ thinking. That position has not only become Government policy but has been backed by many of the green non-governmental organisations and, crucially, by the Committee on Climate Change. The Government had to be dragged on to this agenda,
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however, and their previous use of competition as a main tool for encouraging CCS was woefully inadequate. I am glad that we are now shot of it and have something that is far more ambitious and looks far more like the policy that my right hon. Friend the Member for Witney articulated two years ago. That is welcome. Indeed, the Committee on Climate Change has also recommended the use of an EPS as a tool to help drive the decarbonisation of the UK electricity supply.

This excellent Bill and the measures that it would facilitate have seen incarnations as amendments to the Bills that became the Climate Change Act 2008 and the Energy Act 2008, but I think that this is the first time that we have had a sole focus on EPS, and that is to be greatly welcomed.

Despite the growing consensus from industry and the green lobby, the Government have remained entrenched in their objections to the mechanism of an emissions performance standard, despite having done so well in adopting so many other areas of Opposition policy through their conversion to feed-in tariffs and an incentive for low-carbon heat generation. The Government have had a welcome change of heart on those matters, so I hope that the Bill will be the catalyst for another Government U-turn. This matter is incredibly important.

I obviously support the Bill in its detail as well as supporting its overarching aims. The right hon. Member for Ross, Skye and Lochaber has been very smart to keep it so permissive and relatively loosely drawn in its ambition. Giving flexibility to the Secretary of State to set the EPS through regulation will allow a Government gradually to reduce the cap over time according to a trajectory that could give industry the certainty it needs in order to invest in decarbonising electricity generation. The long-term certainty that business needs to plan major capital investment has been a recurrent theme in speeches from both sides of the Chamber this morning and from the Minister himself. It is vital that regulations around compliance with the new standard are detailed, clear and reached in consultation with the industry. Again, it is only by giving business clarity that we can expect it to trust a Government enough to make bold yet vital investments in emerging sectors.

I am glad to see the inclusion of a consideration of the benefits of captured heat in determining the carbon intensity of a power station. That will not only give a much-needed boost to combined heat and power deployment, but encourage more medium and small-scale local generation where a heat load is often better matched to production. Too often, consideration of heat capture at power stations is cursory and this provision will sharpen the demand to get heat capture and transmission infrastructure into the ground.

Stipulating a time scale for introducing the regulations is also a sensible precaution given the Government’s enthusiasm for endless iterative consultation and their track record of delivering regulation on time. In the face of the challenges of potentially catastrophic man-made climate change in this decade and our stringent targets for emissions reductions, we have little choice but urgently to tackle head-on emissions from our power sector.

Electricity generation in the UK accounts for a substantial portion of our CO2 emissions, and we will need to achieve cuts of well over 80 per cent. in that
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sector by 2050. Renewables will play an increasing role, but certainly, through this century, we will need to continue to rely on fossil fuels as the backbone of our energy mix. An emissions performance standard will be essential to give innovators and investors in industry a clear signal of the pace of change expected by the Government and the rate at which we expect carbon capture and storage technology to be developed and deployed. An EPS will catalyse the deployment of CCS—a technology that is vital to reducing emissions in the UK, and absolutely vital to reducing them in the developing world, in countries that are more reliant on coal, and in countries that are without the rich resources for renewable energies that we enjoy in the UK.

The UK is extremely well placed to develop export CCS technologies. I hope that CCS will become a real engine of economic growth for the UK in the coming years. The potential for the creation of jobs to do with that technology is very significant. We have world-leading centres of expertise on the chemical, mechanical and civil engineering skills that are essential to CCS, and we have institutions, such as Imperial college, that have a long and impressive heritage in the sector. We have rich resources of storage sites at depleted oil and gas wells in the North sea. What we stand to gain in intellectual property, jobs and wealth creation through CCS as a result of an EPS should not be overlooked.

The Bill’s provisions should have been included in major legislation a year ago, but it will provide Government with a hugely powerful tool to cut emissions, will give certainty to industry, and could drive innovation, investment and job creation. I am proud that my party has played an important part in promoting the CCS agenda in the UK, and energy performance standards as a means of promoting CCS, but I commend the right hon. Member for Ross, Skye and Lochaber for having the gumption to bring the measures together in one Bill, and for securing legislative time for it. I hope that the Government will respond to that agenda in the same positive way that they responded to the previous Bill discussed today. I hope that they realise that we simply cannot afford to delay or defer the measures any longer.

12.27 pm

Simon Hughes (North Southwark and Bermondsey) (LD): I, too, am delighted to welcome the Bill introduced by my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy). He made it clear that our party has taken the two opportunities given to us by good fortune this year, through the private Members’ Bill ballot, to come forward with practical proposals to deal with the climate crisis that we face. Earlier in the Session, my hon. Friend the Member for Somerton and Frome (Mr. Heath) introduced his Fuel Poverty Bill, but frustratingly he failed, by a handful of votes, to get it over the hurdle of Second Reading on its first outing. It is on the Order Paper to be considered later in the year, but I guess that that means that it will not get on to the statute book this year.

The Fuel Poverty Bill signified the importance of the energy efficiency agenda, to which the Minister says that he is committed. The right hon. Member for Holborn and St. Pancras (Frank Dobson) reaffirmed the importance of that agenda earlier, and we are all signed up to it. Now my right hon. Friend the Member for Ross, Skye and Lochaber has added to that by making another
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specific proposal in his Bill. As was evidenced by the support from my hon. Friend the Member for Cambridge (David Howarth) and the hon. Member for Bexhill and Battle (Gregory Barker), the proposal has growing support in politics, and huge support outside. There is huge support for ensuring that we do not just proceed as we are doing, but put some regulatory constraints in place for the future, so that people can plan for the future and adapt the energy industry accordingly.

The most important first point to make in support of my right hon. Friend is that the core proposition is that if we regulate now, everybody knows where they stand and they will work to live within that framework. If we do not regulate, there is uncertainty and the risk is that people will not understand the crucial importance of moving quickly to avert climate crisis. This is not a Bill for which he plucked an issue out of the air, so to speak, and said, “This is important because it will add to the agenda.” It is a Bill that relates to our country because coal has been so important and remains so important. We expect it to continue to be important, but if it is to play a responsible part in our future energy mix, it must be produced in a way that coal-fired power stations do not send huge amounts of CO2 out into the atmosphere, contributing to the climate crisis.

My right hon. Friend mentioned the widespread support in Parliament for the Bill and the 186 signatures on the early-day motion in the name of the hon. Member for South Suffolk (Mr. Yeo), who chairs the Environmental Audit Committee. It is significant that the motion is proposed by him, because that gives it the gravitas that deserves recognition. Having totted up the figures today, I am pleased to say that 49 Liberal Democrats are signatories among those 186 names, including my right hon. Friend the Member for Ross, Skye and Lochaber, my hon. Friend the Member for Cambridge and me.

The second strong point, which the hon. Member for Bexhill and Battle rightly highlighted, is the importance of countries such as China to the debate. My right hon. Friend pointed to the importance of what has been happening in the United States, particularly in California. China is the obvious place where there needs to be a change in energy production in response to the environmental agenda. According to the figures that I have, China is now the largest greenhouse gas emitter in the world, getting three quarters of its energy from coal. We get a substantial part of our energy from coal, as do other European Union countries, such as Poland.

The Chinese have recently shown their understanding of the need to adapt and change, which is exceptionally welcome. We must do all we can to encourage that. The new American Administration in the White House has shown its determination to change the agenda. There was the first legislative move in Congress, in the House of Representatives a week ago today, which, though modest in some respects, is none the less a move in the right direction.

The world is moving to realise that we need an energy mix that has the maximum renewable energy component, but that if we continue to presume that coal will play a part, coal must in future be produced within the constraints necessary to ensure that it does not pollute the atmosphere more and contribute further to the environmental crisis. That is important for our country, the European Union, the United States, China, India and other such countries.
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Whatever its merits and its huge contribution in the past, coal is the dirtiest large-scale power generation method that we use.

The second point implicit in the remarks of my right hon. Friend is that we should see the current situation as an opportunity for Britain. We have the technology, the scientists and the engineers, and there are many people raring to go. As I learned from my discussions with the Californians, and as I assume the hon. Member for Bexhill and Battle also learned from his conversations, they are not in any doubt that the technology can be delivered. They do not say that they are only at the beginning of the research and development process. They know what they have the capability of delivering.

It was interesting that in the United States, as I understand it, once California had legislated, which it did in 2006, the neighbouring states also legislated. The danger was that if California legislated and neighbouring states did not, people could import energy from neighbouring states into California, circumventing the whole strategy. Washington state, Montana and Oregon have all now legislated, so this is not an area of policy or legislation that is not beginning to be accepted broadly. This is not an idea whose time has not yet come.

Gregory Barker: The hon. Gentleman is absolutely right to say that California created a wave that is now being followed and encouraged by the Obama Administration. However, on a point of detail I should say that the emissions performance standard in California applies to all energy, whether generated in the state or imported, so there is no danger of exporting dirty coal to neighbouring states. That has meant that some of the coal states, in the heart of the coal producing areas, that export energy to states as far away as California are having to make changes and think again about how they will develop in future.

Simon Hughes: I am happy to be corrected on that point. The Minister has probably not made an official visit to California to see these things, but I am sure that he has been briefed about the strong public support, as well as political leadership, in favour of the initiative.

There is widespread support among the informed community in this country for the proposal. As the Minister will know, WWF and the Royal Society for the Protection of Birds, which has huge public support, with a membership of more than 1 million, as well as Christian Aid and the other faith-based organisations, are all clear about the matter. They have written to many MPs asking us to support my right hon. Friend’s Bill because they realise that, given that coal contributes half our CO2 emissions, we will not grasp the nettle unless we deal with the coal industry. The hon. Member for Bexhill and Battle mentioned the fact that single power stations can contribute. Anyone going up the east coast main line has only to look out of the window to realise the history of and prospects for what is going on. My right hon. Friend has adopted a straightforward ring-fenced area of policy.

The proposal in the Bill is entirely straightforward. It is a model private Member’s Bill; I hope that the Minister has no objection to how it is drafted. It makes provision for Ministers to set the limit and the date by which the measure has to be put in place and to have a consultation period before doing that, with all the obvious suspects.
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It also stipulates that there should be a deadline of a year after the Bill is enacted so that we know that the issues are not being put into the long grass.

All the advice that I have been given, since I took over this brief in its newly constituted form at the beginning of this calendar year, is that we need to be robust about the policy that should be adopted by Her Majesty’s Government, of whatever party, on the issue. So far, the Government have not been robust enough, and the Bill is an attempt to make colleagues more robust.

I want to say only a couple more things, as I do not want to give the Minister an opportunity not to be entirely positive about the Bill in his response, and I want him to have time to be positive. There is external evidence other than that from places such as California, which have legislated; there is evidence from groups that are supportive. I pray in aid Dr. James Hansen, the well respected director of the NASA Goddard Institute for Space Studies. He has expressly said that there must be an end to building new coal-fired power stations in the developed world unless carbon capture and storage technology operates in them from the outset. There lies the rub. The difference between the Liberal Democrats and the Government is that the Government have not yet signed up to the idea that such technology should be in place from the outset.

On the day after the Budget announcement, the Secretary of State for Energy and Climate Change made a statement—it was responded to by my hon. Friend the Member for Cheltenham because I was in the United States at the time—in which the Government set out their proposals, whereby there can be carbon capture and storage plans, and the capacity to put the technology in place, but not at the beginning. Therefore, someone could build, say, Kingsnorth power station, get it going and allow it to do its work, but it would not have the controls put on it until later. The danger of that is that as little as a fifth of the emissions might be caught from the beginning. The idea that the sector that contributes half the emissions in the UK might, in its new generation, have only a fifth of its emissions captured, and only later have all of them captured, is, bluntly, not good enough.

When the Government launched their consultation on 17 June, they proposed that new plants should fully fit carbon capture and storage technology within five years of the technology being technically and economically proven. They acknowledged that it might not work, might be delayed or might not be economic, and therefore proposed that we accept a safety net, as it were, to deal with emissions from new plants. They actively considered that an emissions performance standard—my right hon. Friend’s proposal—should be an option, but said that we should not decide on it until 2020, which is in 11 years’ time. My right hon. Friend has come to the House to say that we need to decide on this imminently—not today, but so as to have the legislation in place this year in order for the date to be fixed next year. That would mean that next year the big energy companies will know the date by which they must have the technology in place, and that they will not be able to get Kingsnorth, or any other power station, to start producing until it is in place. Following all my consultations, I have no doubt that if that were the law, they would comply with it and understand it. They know they have a market out
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there, and they know that coal has a future in this country. It is important that it does, within the constraints, but we must set the regulations now.

My right hon. Friend has brought his heavyweight experience as a politician to a subject which, as he says, is probably not the thing that people on Skye wake up in the morning thinking most about. Nevertheless, he is very clear, as we are as a party, that we now need to put it at the top of our agenda. I hope that we will all sign up to the fact that, as my hon. Friend the Member for Cambridge argued, it is not sufficient to leave it to the market. The crisis is so great that we have to regulate. I am not someone who instinctively wants to regulate and legislate; as a liberal, I always come to that view as a matter of last resort. However, we can all read the advice of the Committee on Climate Change and look at the science in the build-up to the Copenhagen talks. I am persuaded by the science, as we should all be, that it is necessary to act now, not, as the Government propose, in 10 years’ time—that is not good enough.

I hope that the Minister will be very positive about the Bill and robust in understanding its importance. If we can make progress on it, this will be a doubly good day for the environment in the House of Commons.

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