"whether coal-fired generating stations for which appropriate consent is given on or after 1st January 2020 that are built in Great Britain can"
have full capacity for CCS. Can she assure us that it is not anticipated that coal stations that cannot have CCS in them after 2020 will continue to operate, or is it anticipated that such stations might continue without CCS?
I repeat that these are issues with which Parliament should be rightly concerned. Ensuring that our policies deliver the carbon reductions that we need within the time frame that we need them is of critical importance if we are serious about tackling climate change. New clause 8 provides the means for Parliament to hold the Government to account for progress on these matters. It requires the Government to lay before Parliament, every three years, a report on progress towards the decarbonisation of the electricity sector including the decarbonisation of coal-fired power stations. The report will also include an assessment of the status of CCS technologies and progress towards demonstration at a commercial scale, and whether coal-fired power stations that have been consented to from 2020 can be expected to be fully CCS from the start.
Colin Challen: I think that I was a second ahead, but I am sure that my hon. Friend the Minister will take both interventions. Will she spell out what decarbonisation means in the context of this debate? I know that the Government have had a consultation on the subject. When we talk about CCS, are we talking about 100 per cent. abatement, 50 per cent. abatement or somewhere in between? I hope that we are talking about nothing less.
Joan Ruddock: Knowing how deep an interest my hon. Friend takes in these matters, I am afraid that I cannot answer his question in the precise detail that he would require. We will follow the advice that we get from the independent Committee on Climate Change, which has already made pronouncements on the decarbonisation of the electricity supply by 2030. We are currently considering how to progress from 2020 through 2030 to 2050, and it is in that context that we will be able to give him a definitive answer.
Paddy Tipping: Does the Minister believe that we need to be really honest with people and say that CCS has real potential but that it is currently unproven? That is why we need demonstration plans and a period of time in which to experiment with the technology and economics of the area. Those who press for early action risk the possibility of closing down CCS plants.
Joan Ruddock: My hon. Friend demonstrates real understanding of and wisdom on this issue. As I continue with my remarks, I will give force to the points that he has made. CCS is a new technology and we need to work on it, but it has great promise.
"there are only four fully integrated, commercial-scale CCS projects in operation"
Joan Ruddock: I am sorry to contradict what I am sure is an excellent report-indeed, I might not contradict it, as there may be a misunderstanding about size-but I am advised that there are no plants operating at the scale that we are proposing in our CCS arrangements for this country. There are plants operating at a pilot scale and there are research plants in other parts of the country, but there are no known commercially viable plants operating at the scale that we propose.
Bob Spink (Castle Point) (Ind): The Minister will have seen the report of the Select Committee on Science and Technology on CCS and its investigation, so she will know that the Committee agrees with her regarding CCS and the developing technology and that we must not rush into it too quickly and fall. She will also be aware that the three-year review period mentioned in new clause 8 is very long. Has she considered making it a one or two-year period?
Joan Ruddock: I thank the hon. Gentleman for that question. I know that he, too, takes a great interest in these matters. We certainly did consider having a shorter reporting period, but because there is quite a long way to go to make CCS operational at a commercial scale, the three-year period seems appropriate to us. That will mean that we will report in 2012 at the latest-just a couple of years from now-and in 2015 and 2018, coinciding with the review period. We think that that is appropriate, but of course hon. Members can always ask for ministerial statements at any time.
Mr. Brian Binley (Northampton, South) (Con): I recognise the wisdom of the hon. Member for Sherwood (Paddy Tipping), but also the need for balance in these matters. Will the Minister therefore confirm that competition among nation states for investment in CCS technology is massive and growing quickly? Does she agree that we must make sure that we do not disappoint potential investors by giving the impression that we are not overly bothered?
Joan Ruddock: I could not agree more with the hon. Gentleman. I am so glad to see such support on the Opposition Benches, from him at least. He is right: we need to get on with this- [ Interruption. ] I think that we may hear from some members on the Opposition Front Bench that they want to tinker with our plan for CCS, and possibly undermine it. We are very concerned about that.
Joan Ruddock: The hon. Gentleman says get on with it and that is certainly what we want to do. We want to have these plants up and running: that is the very heart of this Bill, and I thank the hon. Member for Northampton, South (Mr. Binley) for his remarks. He is absolutely right about the competition, as we need to make sure that the UK remains a leader in this field.
Martin Horwood: I am grateful to the Minister for giving way again. She questioned the scale of existing CCS projects. The Sleipner project in Norway currently stores 1 million tonnes of CO2 a year in the Utsera saline formation, which is expected to have a total capacity of about 600 billion tonnes. What kind of scale is she imagining?
Joan Ruddock: Unfortunately, I do not have to hand the document to which the hon. Gentleman is referring. Although my understanding is that the facility concerned is not a coal plant that generates electricity, which is what this Bill deals with, the hon. Gentleman is absolutely right that the Norwegians have done groundbreaking work on the storage of CO2. That is very valuable, and is part of the knowledge that we have today. The results achieved in Norway enable us to say with confidence that we know that the storage end of the chain seems to be practicable. However, we are talking about an operation involving generation, transport and storage, and no system covering those three components on a large scale exists in the world today.
The House will recall that I was talking about new clause 8. The final element of the report will be a review of whether Government policies should be revised in order to achieve our stated goals. I think that it is very important that I draw that to hon. Members' attention.
A key part of the new clause is the requirement for the Secretary of State to take into account points raised by the independent Committee on Climate Change. That will ensure that reports will have to consider the advice of the organisation best placed to judge progress in delivering carbon reductions. I think that that answers to some extent the point raised by my hon. Friend the Member for Sherwood (Paddy Tipping).
This new clause, with the first report due in 2012, will guarantee hon. Members the opportunity to scrutinise progress towards our decarbonisation objectives and, importantly, to challenge the Government's actions. It will ensure that the Government undertake a regular review of key policies. It will ensure regular assessment as to whether policies require revision in order to deliver on our commitments. It is the backstop that will ensure that there is only a limited role for unabated coal in the future.
The new reporting clause is designed to give confidence to those who argue for an emissions performance standard. We share the concern across the House for greater progress on decarbonisation of our energy supplies. We agree with the Climate Change Committee that a step change in the pace of emissions reductions is required. We reflect this need in the measures set out in our low carbon transition plan, which will deliver emissions reductions to achieve our target of 34 per cent. over 1990 levels by 2020. They will also enable us to meet our statutory carbon budgets.
Emissions from the power sector are already regulated through the EU emissions trading scheme, which is at the heart of our domestic and EU efforts to tackle climate change. Phase 3 of the scheme, starting in three years' time, provides a significantly stronger framework than previous phases. An EU-wide cap will ensure a more ambitious, certain and consistent approach across the EU, and in the UK there will be 100 per cent. auctioning of allowances to the power sector, which will ensure that the cost of carbon is better integrated into business decisions.
I acknowledge, however, that the EU ETS on its own is not sufficient to reduce emissions from the power sector to the extent required. That is why the transition plan contains a raft of measures aimed at promoting the development and deployment of renewables, new nuclear and, of course, clean coal.
Our policy measures for clean coal are specifically designed to deliver a package that will enable us to meet the Climate Change Committee's recommendation that there should be only a limited role for unabated coal in the 2020s. There are four elements to the package, as follows: all new coal-fired power stations must demonstrate
CCS at commercial-scale, around 400 megawatts of output; four commercial-scale demonstration projects on coal-fired power stations will be funded by the CCS incentive delivered by this Bill; demonstration stations will be expected to be retrofitted to their full capacity by 2025; and, finally, a rolling review of progress in the development of CCS technology will culminate in a report by 2018 that will consider the case for new regulatory and financial measures to drive the move to clean coal. I think that that goes some way to answering the questions raised by the hon. Member for Angus (Mr. Weir).
No other coal-dependent country has a policy that says that no new unabated coal-fired power stations will be built. No other country has a statutory financial incentive capable of raising the sums required to support the capital and operational costs of four large-scale CCS projects over the next 10 to 15 years.
Joan Ruddock: At the moment, I cannot answer that question, but I can tell my hon. Friend that, in devising the scheme, we have taken proper account of where the balance of interests lies. It is in the interests of all our consumers to have security of supply. We believe that coal must remain in the mix, and that the incentive could ensure that.
As always, we will consult at length about how the levy is framed. When the proposal is put out for consultation, the impact assessment will make clear what the effect will be, but we do not envisage that a disproportionate burden will fall on consumers in this country. We all know that we have to move to low carbon, and that everyone has to make a contribution. It is the Government's policy to try to protect those consumers with the least means to pay their energy bills.
I was setting out the elements of our plan for CCS. Far from being a laggard, as is often suggested by the Opposition, Britain is leading the world on this agenda, as is widely acknowledged by other countries. The new reporting requirement in new clause 8 guarantees that Parliament has the opportunity to challenge the Government on delivery of this programme to monitor our wider decarbonisation of the electricity sector, and to consider whether an emissions performance standard might be needed in the future. The introduction of an EPS now, as required by new clauses 6, 15 and 25-all of which are supported by some Labour Back Benchers, as well as by the Liberal Democrat and Conservative parties-would not lead to greater emissions reductions than those delivered by the framework that I have just set out and the EU ETS.
John Robertson (Glasgow, North-West) (Lab): Does my hon. Friend agree that the EPS could scupper the whole carbon capture project? The fact that the target cannot be reached in the initial phase means that the project would automatically have to come to an end. The EPS would therefore defeat the whole purpose.
My hon. Friend anticipates me. I have just said that the introduction of an EPS now would not lead to any greater emissions reductions. In my next
sentence I intended to say that instead it could prevent any new investment in coal, and thus the demonstration of CCS and the development of clean coal. My hon. Friend is right.
Dr. Gavin Strang (Edinburgh, East) (Lab): Does my hon. Friend agree that the Government would be capable of setting a level-obviously, no level is specified in any of the new clauses-that will not prevent investment in CCS?
Joan Ruddock: My right hon. Friend suggests that we set a level and says that no level is set in the new clauses. That is not quite true. A level is set in one of the clauses that we are about to debate.
What we are saying clearly is that an EPS, whether it is set at a specific level or whether it is entirely open, will undermine the coal programme that we set out, all the provisions in the Bill, and the investment that companies will be prepared to make if-if-there is support for CCS. They will not be prepared to make that investment in circumstances in which there is uncertainty about layering over some other standards.
Joan Ruddock: The hon. Gentleman will have to answer questions about the level at which the standard would be set, when it would be introduced and what he understands would be the effect on investment in new coal. I suggest to him that the effect would be no new coal. If that is the Conservative party policy and intention, he will have the opportunity to tell the House this afternoon when he makes his own speech.
I shall try to make progress. The energy industry, the CBI and the TUC have all told us, in no uncertain terms, that an emissions performance standard introduced now will significantly undermine investment plans. If there are no new coal power stations, that puts at risk the whole demonstration of CCS in the UK. Does that matter? We think it does. It matters because CCS has the potential to play a critical role globally in tackling climate change. It matters because fossil fuels play a vital role in our energy mix, and CCS is the only technology that will allow them to continue in a low carbon future.
Mr. Redwood: I know the Minister does not have detailed figures, but surely she must have some idea of the relative costs to the consumer and the taxpayer of cleaned-up coal power, compared with wind power, wave power and so forth. We need to know that to inform our judgment.
Joan Ruddock: I am sorry. Perhaps I did not respond sufficiently to my hon. Friend the Member for Blaydon (Mr. Anderson) who asked the question, and I am happy that it has been repeated. I say again that the design of the levy and the consultation have yet to come, but in our discussions we anticipated the cost to the householder being 2 to 3 per cent. on bills by 2020, arising specifically from these provisions. We all have to bear some burden for developing the low carbon economy. The Government will do that in a proportional way and we will try to protect the poorest.
By acting early on CCS we open up opportunities for UK businesses in a major future market, sustaining 30,000 to 60,000 jobs. But it is not just coal that is at risk. The extension of an emissions performance standard to gas-fired power stations, which is required by new clauses 6 and 15, would delay, and possibly deter altogether, investment in new gas projects.
That is no small matter. Around 18 GW, which is about one quarter, of current electricity capacity is expected to be lost over the next decade as environmental standards for coal and oil power stations become more stringent and some nuclear plants close. A significant proportion of the new capacity that will fill the gap is gas-fired. Any delay in investment caused by the regulatory uncertainty associated with an emissions performance standard will pose significant risks to the security of our energy supplies.
I turn to the situation that we expect to be in by 2025, which is at the heart of new clause 25. Let me make it clear that the charge made by Greenpeace in The Guardian today is unfounded. It will not be possible for