| Previous Section | Index | Home Page |
28 Jan 2010 : Column 342WH—continued
A rolling review process, which is planned to report by 2018, will consider the appropriate regulatory and financial framework to further drive the move to clean coal. In the event that CCS is not on track to become technically or economically viable, an appropriate regulatory approach for managing emissions from coal power stations will be needed. Again, this puts into effect the Committee's recommendation 11.
I cannot stress enough that the importance of CCS is many sided: it will bring not just environmental and energy benefits, but benefits for our economy. It is also important to recognise that CCS is not only applicable to power stations. Any large static source of emissions could potentially benefit from this technology. Taking all these opportunities together, it has been estimated that the CCS industry could sustain up to 60,000 jobs in Britain by 2030.
I pay tribute to regional development agencies and others who are working on the potential for CCS in their own areas. This is true in Yorkshire and in the north-east. I visited Durham Energy Institute last week and met Professor Jon Gluyas, who occupies what he claims is the first chair in the world for carbon capture and storage, although I think some other UK institutions would challenge his suggestion that that is the best position on carbon capture expertise, even in this country-Edinburgh comes to mind instantly. Nevertheless, that shows the enthusiasm at regional level to make a success of something that is important nationally and internationally.
Looking forward beyond 2010, we plan to release a CCS strategy this year, considering the international development of CCS, our business opportunities and jobs in this country, infrastructure development, the skills that are needed, capacity building and technology development. We have also announced the creation of an office of carbon capture and storage, about which we are currently consulting stakeholders to determine its role and objectives. In the December 2009 pre-Budget report we also confirmed that the UK will fund four demonstration projects, including our current competition that was launched in 2007. We plan to commence the selection process for the further demonstration projects later this year.
Simon Hughes: Returning to my previous question, which the Minister mentioned in his last paragraph, he said that a CCS strategy is in the pipeline, which is welcome even though it is slightly delayed. May I ask him the same question that the hon. Member for Wealden (Charles Hendry) and I asked him about another document during the Committee stage of the Energy Bill? Will it be possible, and is it not logical, to have that document in the public domain, as with the document that the Government are preparing on warm homes, in time for us to consider it before Report and Third Reading of the Energy Bill?
Mr. Kidney:
Because the hon. Gentleman and the hon. Member for Wealden (Charles Hendry) have raised this matter with me in Committee in respect of household energy management strategy-not today's subject-I have experienced the delights of speaking to Whips about the management of business. I am an older man for having done that and I went greyer as I did so. Therefore, I am not going to answer the hon. Gentleman's
question in his terms, but I shall say that we are excited about that document, which is important for future development and, as the hon. Member for South Suffolk said, it is important to capture as many benefits of this process as possible for this country's future well-being, including its economic well-being. I am anxious that we all see that document as soon as possible and we are impatient about introducing it to the world. We will do so when we can.
We are moving swiftly onwards with the progress of CCS and I hope that today's debate helps allay any concerns that hon. Members have raised and gives confidence that the Government are committed to the delivery of an ambitious programme of four commercial-scale CCS projects by 2020, and to ensuring that appropriate technical, regulatory and commercial frameworks are developed with timely, informed decisions taken to put them in place. To take CCS forward we must raise its profile publicly. I am sure that all hon. Members agree that gaining cross-party support on this issue will go a long way towards gaining the public's backing and acceptance.
I am conscious that the hon. Member for South Suffolk has asked several questions to which I am willing to respond, but I have been asked to reply to the whole debate at the end. I propose to save my response to those questions and to those asked by other hon. Members until the end of the debate. I hope that that is a suitable way to conclude.
3.18 pm
Dr. Alan Whitehead (Southampton, Test) (Lab): The report that we are discussing is important and good. I was about to say that I was sorry that the Committee Chairman was not supported by Committee members, but the hon. Member for East Dunbartonshire (Jo Swinson) has just arrived, which is good because, as hon. Members have said, we are considering not just an important report, which should be discussed, but the Government response, which was eventually published, and the progress that has been made since the report was published, which has been set out.
Things have moved on since the report's publication, arguably with the substantial assistance of that report's considerations. That is a credit to the report and its contents. I say that things have moved on, but in the next few years, we want to pursue an energy strategy that is coherent; that keeps the lights on; that moves us towards an almost complete decarbonisation of our energy supplies by 2030; that keeps us on track for our 2050 climate change targets; and that keeps us within our carbon budgets as set out by the Climate Change Act 2008. Action is clearly imperative very soon if we are to ensure that our energy supplies decarbonise in that way, but also remain in place. I shall perhaps go into that further in a moment.
Although it is stated that the carbon capture and storage schemes currently being considered by the House in the Energy Bill are pilot schemes, two things are evident to me. Although a number of people say that those are experiments to see whether carbon capture and storage really works, they are essentially schemes of scale. They are about putting together the components that have already been proven in order to demonstrate that the entire system of capture, transport and
sequestration works on the scale that will be required in the next few years. In that sense, they are not experiments, because we know that the components work. They are about ensuring that overall, the system works as well as it should. Four plants will be fitted with either pre-combustion or post-combustion processes. Ensuring that they open, operate and sequester their carbon is at the heart of what happens with regard to our future energy policy and the use of mineral fuels of any description.
When we talk about mineral fuels, we need to be clear on what carbon capture and storage is about in the first instance. As the Committee on Climate Change says,
"there is a longer term role for unabated gas generation reflecting lower emissions intensity and a potential role as back-up generation. The clear priority is therefore for early application of CCS to coal generation."
That is the degree to which we should concentrate on carbon capture and storage, as regards coal generation. Should we have any coal-fired power stations in future? If we do-if we build any-in what way will the emissions from them, which clearly would be unacceptable if they were unabated into the 2020s, be addressed? In what way can those new coal-fired power stations be brought on stream? How can we ensure-the hon. Member for South Suffolk (Mr. Yeo) emphasised this point-that they are not assets that are stranded and decommissioned early in their life, and that therefore do not play a role in our future energy supply?
The Committee on Climate Change also states that
"there is no role for unabated coal-fired generation beyond the 2020s on the way to an 80 per cent. emissions reduction in 2050".
It emphasises that it anticipates that any coal-fired power stations existing at that point would be abated. That gives rise to fairly profound considerations about what happens to our energy supply in the next 10 to 20 years. One consideration relates to the assumption that with carbon capture and storage, not only will there be a number of new coal-fired power stations built but, as importantly, the coal-fired power stations that do not close under the European large plant directive in 2015-16 may continue to operate for some time. What will happen to those particular coal-fired power stations in our energy economy during that latter period? Do they simply close because they cannot abate? Do they continue, with restricted hours? Or do we simply, whatever Government are in power at that stage, collectively throw our hands up and say, "Well, they are essential to the energy economy, so they had better continue," even though we know that their emissions will be quite disastrous for any of our targets on carbon reduction for 2030 and certainly 2050?
Jo Swinson (East Dunbartonshire) (LD): I am listening to what the hon. Gentleman says with great interest. Does he not think that that perfectly illustrates the dilemma faced not only in the UK, but in the international context? If we do not manage successfully to get retrofitting technology that can be applied to all manner of coal plants, it is not just a few coal plants in the UK that might be disastrous for meeting our targets; if we consider all the coal-fired power stations in China and all the other parts of the world, we are on a path of certain destruction.
Dr. Whitehead: The hon. Lady is absolutely right. I am referring in the first instance to 10 coal-fired power stations that will continue to operate after 2015-16 in the UK; they are currently operating. Most of those are pretty old coal-fired power stations, and a number of those will expire of their own accord in the years not too far after 2015-16, but some, such as Drax, will, it is supposed, have a life well beyond, say, 2020. Alongside the coal-fired power stations closing in 2015-16, a number of oil-fired power stations will close under the large plant directive. Six are currently operating; they will all close.
That is significant not just in the UK, but for coal plants across the world. The hon. Lady is right: it is bad enough if we have unabated coal continuing into the 2020s in this country, but if that continues across the world, the chances of world energy supplies decarbonising as a whole will be zero. As far as the plants' continuing emissions are concerned, if the plants continue, it is essential that they are effectively decarbonised by wholesale retrofitting and/or have limits placed on the total amount of power that they can generate in any one year. That is very important because unless we fundamentally change the way we operate the UK energy market, we will continue to have a system whereby calls for power are made to energy suppliers via a central balancing mechanism, which will involve a combination of very long-term contracts, shorter-term contracts and what one might call panic contracts, the contracts that deal with the peak of power use-metaphorically, at half-time in the cup final. Smart grids and various other devices will do a great deal to smooth those peaks. Nevertheless, the idea that there will be very long-term contracts, medium-term contracts and very short-term contracts will probably continue in the UK energy market.
One of the so-called benefits of the BETTA-British electricity trading and transmission arrangements-system with regard to energy market balancing and contract offers and acceptance is that power stations that would not normally provide major input into the load of energy on the British energy markets do not become stranded assets and do not close immediately. They play an increasingly peripheral role in the energy market, but some of their energy can be called on at peak periods if necessary. We find already that the oil-fired power stations that will close in 2015-16 have a very small run-time per year; they come on only at peak periods. A number of the older coal-fired power stations do the same. However, if those power stations simply disappear over the next 10 years, we will probably have to invent new back-up plants to ensure that our margins are large enough to give security of energy supply, enabling us to call off power at peak times.
Of course, we cannot do that with nuclear power because it cannot be turned off. It continues to provide power; it has to provide long-term contract base-load power, and cannot do otherwise. We can do that to do a considerable extent with shorter-term contracts for renewables, but we are facing an energy economy. There could be a penetration of wind into the energy economy of some 30 per cent.-a large amount of clean, good power, but not necessarily there when we want it. Whether we move to a storage energy economy, with call-off from storage, or have those plants operating as a continuing back-up is a big question for future energy policy.
However, if we use some of these plants as back-up, we return to the question raised by the hon. Member for South Suffolk of whether plants should be regarded as stranded assets, disappearing before the end of their time, or whether they should live out their natural lives as amortised assets that can provide an input into the energy economy.
If we do not have methods whereby those plants can retain a role in the energy economy over time, the Government, or private energy suppliers, will inevitably have to build a generation of plants to provide a marginal input into the energy economy. Curiously, they would never earn their keep. We would have to mothball them before they came to the end of their natural lives. We would positively have to build new back-up. That, it seems to me, is a difficult prospect to contemplate, given how the energy economy is likely to change over the next 20 years.
Keeping those plants in some form of operation is important in terms of balancing the energy economy, but the dilemma is that if those plants continue unabated, it will be inimical to our climate change targets. We need schemes to ensure that new plants are fully abated by a certain time. If new plants are to be commissioned, whether or not there is initial substantial underwriting with respect to carbon capture and storage, money will still need to be put into commissioning, investing in and developing those plants.
We need to be clear that new plants will be fully abated after a certain period. My hon. Friend the Minister underlined that after a certain time, new coal-fired plants will have to be fully abated. We should also make it clear that, should existing plants stay in our system, they, too, should be progressively abated. That, it seems to me, should be an important part of our carbon capture and storage policy.
If that is our aim, we must ask whether we can ensure that, over time, plants are made reasonably financially secure and have carbon capture and storage attached, and whether they can they do that in the time available. There are two problems related to that. First, I doubt whether those plants can simply rely on the carbon price to make carbon capture and storage, and particularly retrofitting, part of their operation. Over time, we therefore need to be prepared to ensure that, in one way or another, the underwriting is there.
We trust and hope that phase 3 of the European Union emissions trading system will produce a significant and sustainable rise in the price of carbon, perhaps through a carbon price floor. It is difficult to envisage only one country having some form of carbon price floor, because it will be exporting money to those countries that take advantage of it, at least under a European system. A carbon price floor, or some other method of ensuring that carbon capture and storage can be retrofitted, and ensuring that those plants can operate over time, is an essential aim over the next few years.
Secondly, we need to ensure security at the storage end of CCS. That is not mentioned as being part of the process; it is assumed-indeed, it has been stated on occasions-that we are extremely fortunate compared to other countries. Provided one builds new power stations reasonably near the coast, particularly the North
sea coast, getting the captured carbon piped and sequestered is easier, given the number of redundant oil fields that we have in the North sea.
That is partly true, but the analysis done for the Committee on Climate Change by Pöyry Energy Consulting demonstrated that in general terms there will be enough depleted gas and oil fields, stretching out to 2030, for 10 GW capacity of coal CCS. That will give sufficient space for storage from all pilot plants, and will allow for full sequestration from the new energy plants.
I turn to the serious retrofitting of existing coal-fired plants. As I said, more than 20 GW of plant will continue after 2015-16, although Pöyry suggests that that may not be the case; it depends on when the plants go out of commission and at what rate carbon dioxide is sequestered. However, the sink size of the depleted oil and gas fields available by 2030 may not be sufficient to take all of that sequestration.
At that point, it will be necessary seriously to consider aquifer storage-that is, depleted aquifers and saline aquifers underground. That is a slightly different picture, in as much as the science on such storage is by no means as clear. The geological surveying of aquifers is not as good as that of depleted oil and gas fields. In the not-too-distant future we must move ahead on that front, in addition to the rapid progress that we are making on CCS technology for retrofitting, pre-combustion and post-combustion.
We must ensure that we are able to store in both depleted oil and gas fields and in aquifers; again, we are fortunate to have a plentiful supply of the latter in many parts of the UK. We must get the science right for that, too, so that we can not only store in the immediate future, but can deal with the long-term storage capacity for full retrofitting for coal-and, in the longer-term, the retrofitting of gas-fired power stations, which will eventually be necessary to balance our energy economy. By then, it will be very decarbonised indeed.
I commend this report, the Government's response to it and the tremendous progress that has been made in carbon capture and storage. None the less, I do not underestimate the work that has to be done. The prize of ensuring that we in this country can use a mix of energy that is secure and substantially decarbonised, and that reaches our targets in the years to come, is one that we should acknowledge and reach out for. Hopefully, we will be successful in decarbonising our energy economy in the years to come.
3.40 pm
| Next Section | Index | Home Page |