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We have also been working actively in the global arena to ensure that the UK’s efforts are part of an international effort to prioritise the development and deployment of CCS. We were instrumental in securing EU funding to support a programme of up to 12 EU demonstration projects and a G8 commitment to launch
20 demonstration projects by 2010. The UK has also led the EU approach to the development of a commercial-scale CCS project in China, providing up to £3.5 million for a technical study which will be completed by autumn this year and will inform the demonstration and development of CCS in China. Earlier this week, I had the great good fortune to meet the team of officials in my Department who are doing that work with the authorities and the Government in China. Their expertise, enthusiasm and commitment to the project are deeply impressive.
However, progress is still not being made quickly enough if CCS is to achieve its potential in tackling emissions from power stations within the time frame required to prevent dangerous climate change. That is why the Government published, on 17 June, a consultation paper containing proposals for a new regulatory and financial framework to drive the development of clean coal. The consultation remains open until the date that I did remember correctly earlier: 9 September.
What we propose would provide financial support for up to four commercial-scale CCS demonstrations here in the UK, require any new coal power station in England and Wales to demonstrate CCS on a defined part of its capacity, and require new coal power stations to retro-fit CCS to their full capacity within five years of its being independently judged technically and economically proven. I said earlier that the technology had not yet been established on a commercial scale anywhere in the world, and, as I am sure Members appreciate, there is more than one technology. It is not yet clear which will become the defining technology for the future. The fact that we can have a range of demonstration projects in this country, in the European Union and around the world will enable us to test the various possible technologies more fully.
As Members will know, the first of those technologies is called pre-combustion capture. Carbon is extracted from the fuel before it is burned, which means that the fuel must first be “gasified” by being heated in only small amounts of oxygen. That produces “syngas”, which is primarily a mixture of carbon monoxide and hydrogen. Steam is then added to convert the carbon monoxide to carbon dioxide, producing additional hydrogen. The carbon dioxide can be chemically separated, leaving hydrogen that can be used as a “clean fuel” in a power plant, as a fuel for vehicles, or for other chemical processes. Only a few integrated gasification combined cycle coal plants exist, as they are not yet an established technology, and all those that do exist are without CCS.
Capture of carbon dioxide through the second technology, oxyfuel-combustion, involves burning fossil fuels in almost pure oxygen rather than air. The oxygen is obtained through the removal of nitrogen and other gases from air, which is 79 per cent. nitrogen by volume. Burning the fuel in oxygen results in a flue gas of almost pure carbon dioxide and water vapour. The carbon dioxide can then be separated relatively easily from the mixture for transportation and storage.
The third technology is post-combustion CCS, in which the carbon dioxide is removed after the fuel has been burned, just before the combustion products are released in the atmosphere. A chemical solvent is usually used to capture the carbon dioxide from the flue gas.
Subsequent heating of the mixture allows the solvent to be recycled as it frees the carbon dioxide to be compressed, transported and injected into a storage site. This technology is particularly suited to retrofit applications, which is the main reason it was selected for the first UK-based CCS competition.
Our consultation also discusses the merits of an emissions performance standard, which brings me back to the details of the Bill. The Bill would require the Secretary of State to introduce an emissions performance standard for all power stations—coal, gas and oil—that would specify the maximum amount of carbon dioxide that could be emitted per unit of electricity generated. The details of the standard would be set out in secondary legislation.
Emissions performance standards have long been used to regulate emissions of other pollutants. For example, the first Europe-wide limits on air pollutants from motor vehicles were introduced as long ago as 1970 and the large combustion plants directive, which sets limits for sulphur dioxide and nitrogen oxides from power stations, has been in force in one form or another since 1990. That directive and the more general integrated pollution prevention and control directive, which is also based on the setting of emission limit values for various pollutants, are to be subsumed by a comprehensive new, revised and consolidated EU directive: the industrial emissions directive, which is at an advanced stage of negotiation, and may have an impact on plant closures in about 2020.
Using an EPS as a tool to tackle carbon dioxide emissions from power stations is certainly an idea the Government consider worth exploring, particularly in relation to coal-fired power stations. Several US states have already introduced an EPS for power generation. For example, California and Washington have introduced an EPS based on emissions levels from gas-fired power stations for new base-load generation. Proposals have also been put forward at the federal level through the US Clean Energy and Security Act that I mentioned at the start of my speech, although the legislation has yet to complete its passage. Page 35 of the consultation document contains a very useful description of the American legislative attempts to set EPS standards; it sets out the position in California, Oregon and Washington, as well as giving more details about the Clean Energy and Security Act.
An EPS can be absolute, so that a power station is expected to meet the standard at all times, or it can be averaged over a period of time, so the power station has to ensure that emissions meet a specified average over a year, for example, or a lifetime. Our consultation document sets out two broad approaches to the possible use of an EPS as part of the regulatory framework. One approach would reflect the development of CCS technologies, ensuring that the timing and level of any EPS implementation is linked to progress made on CCS. This would mean setting an initial EPS at a level that would support CCS demonstration and then, once CCS is proven, tightening the standard to a level that supports retrofit.
The second approach would be to set the EPS in advance of demonstration of CCS technology; that is the approach urged on me by the right hon. Member for Ross, Skye and Lochaber. This would mean setting an EPS with a downwards trajectory for emissions in line
with climate change objectives. Our consultation also looks at the critical issue of the level at which the standard should be set under either scenario.
Our proposal is that if an EPS is introduced, it should be based on average emissions over a period of time, possibly with a maximum emissions level that could be tightened for individual sites if they are judged technically and economically able to meet that standard. In setting a maximum level, there are various possible approaches. One of them is linking the standard to emissions of gas power stations. This would create a level playing field for coal and gas power stations in terms of emissions. Very high levels of co-firing with biomass could take coal power stations some way towards meeting such an emissions level, but in practice they would need to fit CCS.
An alternative approach is to link the standard to the minimum achievable emissions at each site while allowing economic operation of the plant, based on an assessment of best available techniques. Until we know more about the operation of CCS on a commercial scale and future carbon prices, it is difficult to make an informed judgment about what this level might be.
Another option is to link the standard to modelling projections of the contribution that reductions in emissions from power stations could make to delivering climate change goals. In this case, assumptions would need to be made about factors such as the carbon price and the availability and costs of options for reducing emissions across all sectors.
Gregory Barker: That is a very helpful canter through the consultation document, but can the Minister say that he does not anticipate arriving at a conclusion whereby there would not be some form of EPS? Will he say that the Government are committed to the EPS in principle, even if he cannot specify to which particular scheme or number they will attach themselves?
Mr. Kidney: I thank the hon. Gentleman for showing such an appreciation of my summary of the consultation document. He will notice that in none of the options I proposed is there not to be an EPS of one form or another. I hope that in a moment I shall be able to discuss contingencies in case CCS is not proved on a commercial scale by 2020—our ambition is that it will be—and even in such circumstances the EPS may well have a role to play.
Another key issue in the development of a position on an EPS is an understanding of how it would fit with the EU emissions trading scheme. At the moment, the ETS is the only mechanism for controlling emissions of carbon dioxide from our power stations and other large industrial installations. Whatever measures we wish to take in the UK, the EU ETS will remain the central measure for reducing emissions throughout Europe. It is therefore essential that any approach to an EPS in the UK ensures that it complements the EU ETS and is fully consistent with EU law and policy throughout the rest of the European Union.
The Bill suggests that the EPS should be implemented through the development consent process. That is certainly one option, but there are others. Our consultation set out two options for implementing an EPS in order to implement a requirement to retrofit CCS technologies once the technology has been assessed as proven. In
both cases, the Environment Agency would take a leading role. In the first option it could use the environmental permitting regime that it already uses to limit emissions of other harmful gases, such as sulphur dioxide and nitrogen oxides, in setting an EPS. Operators would have the flexibility to determine how to meet the set standard, and could take actions such as co-firing with biomass, improving operational efficiency or fitting CCS or any other new emissions reducing technologies that might be developed. Alternatively, in the second option, the Environment Agency could simply specify in the environmental permit that the power station has to fit, or retrofit, the CCS technology and operate it.
If an EPS is to be effective in helping to achieve our climate and energy security objectives, a full analysis of the various options and their impacts on the energy mix has to be undertaken. A full consultation process is an integral part of gathering the evidence required for such an analysis, which is why we included the discussion of an EPS in our consultation on the framework for the development of clean coal. I was sorry that the hon. Member for Bexhill and Battle, who speaks for the official Opposition, appeared to take against consultations, given that they are such a valuable part of the process in ensuring that we get the law right.
Supporting this Bill would cut across that consultation. Although we are keen to take the most effective action that we can to encourage the development and deployment of CCS technology as quickly as possible, it would be premature to legislate now to impose an EPS. In addition, as I have outlined, there are a number of significant policy issues still to be worked through before it will be possible to take an informed decision about whether an EPS is the most effective approach to driving the transition to a diverse and secure low-carbon energy supply; about when and how an EPS should be introduced if it is found to be the most effective approach; and about its effect on other existing EU measures, including the EU ETS, to which I have referred.
It is also important to ensure that we have a comprehensive framework in place to support the development and deployment of CCS technologies in order to reduce emissions from our power stations. This is why our consultation covers a range of proposals, not just the EPS itself.
The right hon. Member for Ross, Skye and Lochaber was on the money, as the hon. Member for Bexhill and Battle said, about the timeliness of this debate and his proposals. He is right to press the Government on taking action sooner rather than later. I enjoyed the Gaelic humour over the word “mañana” and it is interesting how something that I said in one debate about not being able to wait for tomorrow was used against me in the very next debate. However, I hope that the right hon. Gentleman will agree that the Government have the right sense of urgency about doing what he wants us to do, although we are determined to do it right.
The hon. Member for Cambridge is no longer in his place, but he was right to say that the carbon price has not yet developed under emissions trading in the way that was anticipated. I told him of the actions that we are taking to try to put that right for the future. The hon. Member for Bexhill and Battle let party politics creep into his contribution a little too much. In the first debate, we all said how important a long-term cross-party approach would be, so it does not help to take cheap
shots at the Government and say that we have had to be dragged kicking and screaming towards a policy position. We have reached that position without any help from him and his colleagues, thank you very much.
I have been urged on more than one occasion to travel to California, no doubt in a carbon-emitting aeroplane. When I served on the Joint Committee that carried out the pre-legislative scrutiny of the Climate Change Act 2008, we heard from representatives of the administration in California by live video link. I shall obtain information from those representatives in that form in the future, and keep my emissions as low as possible.
I agree with the hon. Member for Bexhill and Battle that it is important to get this policy right and ensure that we give long-term, stable signals to the market to provide confidence for private sector investment in what is not yet commercially proven technology. It is important for the Government to show their commitment at the beginning so as to start the process, which is why Government support for the demonstration projects is an important part of the whole. I agree also that it will be crucial in international negotiations that we are able to engage on the basis that CCS will be an important method of reducing carbon emissions in the future, especially in those developing countries that are so reliant on coal as part of their energy mix.
We want to be at the forefront of the technology for CCS, because it offers huge potential for jobs and exports in the future. As the hon. Gentleman says, huge sectors of the Chinese economy are dependent on burning coal in power stations. The world has hundreds of years of stocks of coal, so we have to get CCS or similar technologies fitted in this country and others around the world if we are to keep emissions low. Of course, no amount of legislation here will make China take such action: it is the international negotiations that will be important in reaching that position. The hon. Member for North Southwark and Bermondsey made the same point about China and developing countries that are so reliant on coal as an important part of their energy mix.
In conclusion, this Bill raises an important issue and I welcome Members’ contributions to the debate. I trust that we will continue to have the debate as we develop our policies over the coming months. I hope hon. Members will agree that the Bill is premature at this stage, and I ask the right hon. Member for Ross, Skye and Lochaber to withdraw his Bill, now that we have had such a useful debate. I wish to end where I began, by referring to the meeting that I had with him and representatives of the WWF recently. I told them that this is an important issue and we want to ensure that we have everyone’s support. We must take the right arguments into account, and I suggested that we meet again in the autumn to discuss—I hope—the Government’s position on the responses to the consultation and in the light of a new energy Bill. Clearly, we now know that both of those things will happen. There will be responses to the consultation, because it has already been launched, and we have now heard that there will be a fifth Session energy Bill.
Let me say to the right hon. Gentleman, as my personal commitment at the end of this debate, that I look forward to meeting him and the representatives of WWF who came with him last time later this year.
1.30 pm
Mr. Charles Kennedy: May I thank the Minister—
Mr. Deputy Speaker (Sir Michael Lord): Order. The right hon. Gentleman must say, “With the leave of the House,” to respond— [ Interruption. ] He should ask the leave of the House.
Mr. Kennedy: With the leave of the House, Mr. Deputy Speaker—I have now forgotten what I was going to say.
I want to thank the Minister for his characteristically courteous and, on today’s evidence, characteristically thorough reply to the debate. He has not quite matched the record that he set earlier this morning, but he is not far off. Although I have one hour left at my disposal, I can assure him that I do not intend to make use of it.
As the Minister quite fairly said, if we go back even a few months to January, when the Bill was fist introduced, we can see that things have moved on a lot. They have even moved on a lot in the past two weeks, on the principle that a week is a long time in politics—I think that our meeting took place a week ago last Monday, and things have moved on quite a lot since then. However, I think he was perhaps being a bit unfair. He said that there were three great developments that had taken place: first, the publication of the “Road to Copenhagen” document; secondly, the legislation, in so far as it has been enacted, in the United States; and, thirdly, the welcome confirmation that there will be an energy Bill. There is of course a fourth development, which is today’s debate. We should not knowingly undersell the global impact that we seek to have.
There is movement, and that is to be welcomed. I take on board the Minister’s point that there is not necessarily a disagreement in principle, as things stand at present, to what the Bill proposes, as we know from the early-day motion and from what has been said today. We have heard helpful and welcome comments from the Conservative spokesman, the hon. Member for Bexhill and Battle (Gregory Barker), whom I thank, and from my hon. Friends the Members for Cambridge (David Howarth) and for North Southwark and Bermondsey (Simon Hughes). Members of the Labour party and other parties have also expressed their concerns, not orally today but in other forms, on the Order Paper. Let us see how things progress as we move towards the autumn.
Let me draw one comparator from the 1980s, in reference to a point that was raised more than once in the debate. It concerned acid rain regulation. I remember that there was quite a debate in the House at that point about how best to go about tackling it. The Government had a target to fit coal-fired power stations with sulphur scrubbers, as they were known. The opportunity was repeatedly missed because the framework, the Government of the time said, was not firm enough. Despite the fact that public funding was made available for the new technology, the power companies were able to delay and it was only when an EU directive came into place mandating the technology that in the late 1990s, lo and behold, the companies found the money and the technology was introduced.
As was said in the debate on the Green Energy (Definition and Promotion) Bill, in public policy as well as in private behaviour there is a need for a degree of the
carrot-and-stick approach. However, I hope that the Government will not resile in due course from setting firm dates and setting them as soon as possible.
In conclusion, I hope that that this has been a useful and timely contribution to an ongoing, fundamentally important issue. As well as WWF, to which the Minister has been kind enough to refer on several occasions in the context of the meeting that took place, the cause has had the support of the Royal Society for the Protection of Birds, Greenpeace, the World Development Movement, Christian Aid and ClientEarth. One reason that so many Members, in such numbers, signed the early-day motion is that the constituent members of many of those organisations have been lobbying their MPs to try to secure their active support for what is being proposed. That having been started, it certainly will not go away in the next three or four months, which will take us until after the consultation period; I say that with a view to the next Queen’s Speech, assuming that this Parliament gets that far. On that basis—I hope I get my terminology correct on this occasion—I beg to ask leave to withdraw the motion and the Bill.
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