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The second argument against the introduction of EPS is that CCS is somehow the answer. CCS will be applied to four pilot projects. My hon. Friend the Member for Sherwood (Paddy Tipping) was right to say that it might have great potential, but it also carries huge uncertainties. I am not certain whether I believe that it can deliver, but, at this stage, it is an unavoidable gamble that we have to take. However, we need a plan B.
To say that somehow standards of performance run counter to that process, rather than reinforcing the urgency of the upward trend, is to miss the point completely and surrenders to the notion that we are held hostage to an ever increasing set of demands for public or customer finance to try to make something work when it might well not. This is an extra safety net rather than an obstacle on the road to progress.
Paddy Tipping: I am delighted that we agree on something. Will my hon. Friend concede that we are not clear not only about the technology and about whether it can work-the hon. Member for Cheltenham (Martin Horwood) did not give us an example of a coal project that was working anywhere in the world-but, more importantly, about the economics of carbon capture and storage? Until we can develop and refine that, it is premature to introduce emissions performance standards. We need the learning from CCS before we introduce an EPS.
Alan Simpson: That is quite wrong. We have to say that if someone is going to build a new coal-fired power station they should, in any case, expect to set an emissions performance standard for that station. What is done in CCS should be an enhancement of that. We cannot say that we should build anything that does not have an emissions performance attached to it now. That seems crazy. How can we set ourselves national targets if we begin from a presumption that we are not going to measure anything? That is why we should have the courage to set for ourselves an emissions performance standard.
I concede that the only project that I have been able to find is one that has not been mentioned; it is in the United States. An American Electric Power company CCS retrofit project in West Virginia has so far been able to capture carbon at a rate of 1 per cent., but it hopes to raise that level to 7 per cent. That is a salutary measure of both the starting point and the extent of the road ahead of us. Having said that, I return to the point that this gamble is unavoidable: we have to take it, but we should not do so without setting safety-net standards in relation to power stations having CCS.
Mr. Willis: Does the hon. Gentleman agree that we have been down this road before with sulphur dioxide? There was a belief that we could not collect sulphur dioxide from our coal-fired power stations, but we set a standard and made it an expectation. Stations were then retrofitted, and those that could not be retrofitted were closed. This is a similar road, so it is not as though we have not been here before.
Alan Simpson:
Absolutely. That is precisely the point that the Climate Change Committee made to us: we need a step change in our thinking that engages with the transformation of what we have, while making a shift to what we need for a more sustainable future. This is a time to be brave and interventionist. My biggest disappointment in this regard is about the argument that is used against us-that we should leave everything to the emissions trading scheme. For a start, the Climate Change Committee has specifically said that it does not believe that it would deliver. All the evidence suggests that the scheme, which has been a monumental failure
so far, has become a cheats' charter. In the pre-conferences before Copenhagen, many of our new EU partners were deeply resistant to strengthening carbon-reduction commitments and emissions trading. I fear that the system will turn into a carbon casino which will end up benefiting no one except those who speculate on carbon price changes. That is why the House has nothing to lose and everything to gain from committing itself to the introduction of an emissions performance standard.
My greatest worry is about Parliament and the Government being afraid to take that stance. If we continue to rely on a market for which we have aspirations, aims, ambitions and bundles of encouragement, but precious little to show that any real market transformation is taking place, then all we are doing is playing into the hands of the climate change protestors who believe that the Government of the day have lost the will to tackle the transformation agenda now-not at some stage in the future when we have passed the tipping points of climate change.
For those who say that the public have to step in and challenge unacceptable levels of pollution, that case is reinforced when we, as a Government, refuse to set any limit on how low the standards can go. If my amendment were made, the Government could set standards that were low enough for the industry to fall over, but I hope that if they did so they would be rebuked by the House and the country. I hope that having a debate on this and having an obligation will fire in us the courage to find the will to drive this agenda in ways that we have not been doing.
I think that this evening's vote will not necessarily be divided between left and right, between Tory and Labour or between Lib Dems and nationalists. People outside the House will see the debate as one that divides the vertebrate from the invertebrate. I want a Parliament that is unafraid to do some bullying of the big guys in the playground who terrorise the lives of ordinary citizens and energy consumers. I want us to tackle those bullies, rather than the small kids in the corner. If the House had the courage to do that, I think that the public would rise up and give us a huge cheer. It may be one of the few we ever get.
4.15 pm
Mr. Redwood: The hon. Member for Nottingham, South (Alan Simpson) has made a spirited contribution. I feel equally passionate about a subject that needs more prominence in this debate-how we keep the lights on.
So far, the debate has generated a bit of heat and very little light. The danger of the way that the policy is drifting under this Government is that we may end up with a perfect regulatory system in due course, were they to stay in office, but that we will have no power stations to produce the power that we need and on the scale that we need. That will be because so many will have been retired for one reason or another-nuclear stations for technical reasons, and coal-fired stations for emissions reasons.
When I come to judge this interesting debate, I will have in mind a central question: that is, which amendment would help us to get to an answer more quickly on the provision of more capacity? Surely it is more capacity, above all else, that we need to put in the front of our minds today, so that we do not end up switching off the lights.
Of course, Energy Ministers past, present and future will tell us great things about CCS, new technologies and exciting opportunities. However, I think that any present or prospective Energy Minister will agree with me that the one thing that the Government really must not let happen on their watch-or on the watch of their successor, because we will know whom to blame-is that the lights go out.
My hon. Friend the Member for Wealden (Charles Hendry) rightly said in his opening remarks that he was very exercised by the need to see projects and plans coming forward quite soon, to ensure that replacement power stations are available after 2015 and 2016, when the old coal and nuclear stations retire. He will be worried to hear that, when I came to the debate, I was genuinely open minded about the virtues and wisdom of the amendment that he wishes us to support this evening, should it be pressed to a vote, as it may well be.
However, I have listened carefully to the debate, and am persuaded that new clause 15, proposed by the hon. Member for Nottingham, South (Alan Simpson) and supported by the Conservative and Liberal Democrat Front Benches, does make sense. I believe that it would remove just a little bit of the uncertainty that is gripping the energy market in this country and preventing people from coming forward with the projects for the new gas, coal and nuclear stations-whatever they may be-that we desperately need if elderly people are to be kept warm in the winter.
We need those new stations if this country is to have the reasonably priced power that our industry will need to have a chance to compete, and if we are to keep the lights on in the House of Commons, which we hope in due course will be a place of enlightenment generally, providing the better policies and debate that will enable us to go forward to a better future. New clause 15 could provide the clarity that we need-it has been lacking over the last decade, under successive Energy Ministers-as to what kind of performance standards the Government expect, and how they will reward investors who meet the targets and penalise those who do not.
The Government are trying to suggest to us this afternoon that requiring them to set up targets and standards now will only delay matters more, but I do not see how they can possibly believe that. Given that all CCS projects rest on levy finance, subsidy and grant, any Government seeking value for public money will surely have to say what they expect from those projects.
It would be completely nutty for the Government to say to industry, "Here is a great pot of money. Go away and play, and we will like what you come up with."
Colin Challen: I thought that the right hon. Gentleman at one point in his career had something to do with deregulation. Now he is arguing for more regulation: is that really a convincing stance, or is it simply politically convenient for him to take it at the present time?
Mr. Redwood:
The hon. Gentleman is right that I have consistently wanted far less regulation that the Government have thrust upon us. I have been the co-author of a report that set out large quantities of regulation that I would love to see removed, which I think would make Britain a better place. But I have always believed that where the Government are up to their eyes in something, as they clearly are in carbon management-this
is a Government project which only they can lead; the private sector is not going to do it, and it is something that the Government want to do-where the Government are leading such a project, it would be absurd for them not to say what they expect of people who are to receive public money.
I see the Minister nodding wisely in agreement. She will have to tell the industry exactly what she wishes it to deliver for the prospective amounts of grant and money that the Government intend to offer. Similarly, Ministers have had to start to set out, in conjunction with their partner Governments in Europe and on a global scale in environmental agreements, what they expect industry generally to hit by way of targets for their various carbon trading schemes and their penalty and tax schemes.
The Government have already done that for motorists. We know what our cars must deliver by way of various outputs from the exhaust, and different levels of tax are imposed, depending whether the Government disapprove a lot or a little of the particular vehicle that we have chosen to buy and to use. The Government cannot avoid doing something similar in respect of power generation, given that they wish to live in such a highly regulated world, with complicated systems of carbon trading and of levy, finance, grant, subsidy and altering market prices in order to achieve their aims of carbon management.
I do not see why the Minister is so adamant that the one thing that could get in the way at this stage is a requirement that she sets out what she is trying to achieve. My worry about new clause 15, which was supported by my hon. Friend the Member for Wealden and first inspired by the hon. Member for Nottingham, South, is that it delays everything further. I understand that there needs to be time to consider what the targets and objectives should be, but one would have hoped that after five or 10 years of endless debate about all this, the Government might now be able to share some figures with us so that we can inform our judgments. Leaving it another six months is another unwarranted delay.
I can see that the House recognises that the Government have not done their homework and are not yet prepared to come forward with any factual basis for giving us the kind of figures that industry needs for investment, so they need another six months. Most sensible investors would say, "Until we know what the terms of trade are, we can't respond to such initiatives." They will say, "We know we are going to live in a very rigged and organised market. We know that the Government are going to intervene massively in this market in all sorts of ways-penalties, subsidies and incentives," but until they know exactly what it means in pounds and pence for any given investment, they will surely be reluctant to come forward.
On such occasions Labour suddenly becomes an advocate of the free market, in a way. Labour Members look at me and say, "As somebody who supports freer markets, surely you understand that it is up to the market now to settle these issues. The market will decide how many new power stations we want, and which ones it is going to build." The Government misunderstand that that cannot happen in this case because the market is so managed, organised and regulated. If they wish to regulate a market to such an extent, they make themselves responsible for the results.
If the Government regulate a market as much as they have already regulated it, they need to make clear the missing bits in the jigsaw in order for the private sector to be able to participate and to trade on sensible terms. It is the Government who will decide exactly how much money people make on any of these projects, because it is the Government setting the carbon levels, the emissions levels and so on and having a very big impact on the cost base, so if the Government wish to speed these things up, they have a duty to come forward now with some figures.
I asked the Minister in an intervention, which she kindly took, whether she could share with us some of the background figures that the Government must have on the relative costs of the different ways of generating power, both before and after all the Government interventions through penalties and subsidies. In order to come to an informed view on clean coal, we need to know how it is likely to compare in terms of costs and carbon output with alternatives, with gas and with the other technologies on offer.
After so many years of Green Papers, White Papers and energy policy debates, surely there must now be some understandable figures that can be shared with intelligent Members who want to discuss the issue seriously in order to establish some idea of the pecking order. I should welcome clean coal technology that worked quickly, based on British coal, because I am worried not just about the security of supply domestically and whether we have enough power stations, but about the security of supply of the raw material.
I do not like Britain being as dependent as it is on imported oil and gas, so any technology that moves us away from that dependency is welcome. I start with a prejudice in favour of coal-based power, but I need to know whether that is realistic. There must have been enough studies now to establish some idea of the subsidy, levy intervention and support that would be needed to make those putative technologies competitive. We could then make a better judgment about whether coal can carry on providing for our existing electricity output, which it does from the older stations; whether we are talking about an expansion, which might be welcome; or whether we are talking about a sharp reduction.
If we are talking about a sharp reduction, we must be precise about our regulatory structure for the gas-fired stations that we will need in order to provide the replacement capacity; and we must get on with the nuclear debate in order to find out whether nuclear power is a safe and economic way of filling the gap after 2020, because it clearly cannot do so in time for the gap that will emerge after 2016.
I am persuaded by my hon. Friend the Member for Wealden to support amendment 15, which he supports. It makes a statement to Ministers, but I, like its mover, the hon. Member for Nottingham, South, do not think that it is the definitive answer. I urge the Government to look again at what they can publish and make available, because if they do not do so I cannot see why people would want to come forward with investment projects. If we do not start investment projects now, we will find it very difficult to provide sufficient power at sensible prices after 2016 in order to keep our economy working.
Colin Challen: I congratulate my hon. Friend the Member for Nottingham, South (Alan Simpson) on his excellent work. Even if he does not get new clause 15, he will get new clause 8, and, although that may not be entirely what he wants, it is better than nothing, because it points to a future in which an EPS may emerge.
The Opposition Front Benchers have, to coin a phrase, something of the night about them. They have rather cynically taken up a populist cause, as they did with Heathrow runway three, while behind the scenes they support a massive expansion in carbon emissions-in that case, in aviation. This afternoon, they have not said anything at all about the level of the emissions performance standard, or how it would be applied and so on. We did not hear an alternative policy explaining how much more money might be invested in CCS to achieve an EPS. There is a lot to explain, but tomorrow's press will present the debate simply as a collection of invertebrates giving into Government bullying. It would be quite wrong to characterise the debate in that way, but the press will no doubt have their field day-fed by people from Conservative central office.
I support an EPS, but the question is about timing. The principle is correct, but the timing is of the essence. We have heard examples of where standards exist, but they are applied to existing technologies that we well understand and whose development we can predict. I am not sure that we know how CCS will develop and if, indeed, it will be successful. Indeed, I regret that the Minister was not able to define CCS, and I hope that we establish a definition, because without one we cannot establish a standard. Should CCS be defined as more than 50 per cent. carbon capture, more than 75 per cent. or 90 per cent? The Environmental Audit Committee said that 90 per cent. was the right level, and I agree.
A couple of years ago, several Labour Members visited a CCS pilot project in eastern Germany, close to the Polish border, at a place called Schwarze Pumpe, which might be on the list of stations that the hon. Member for Cheltenham (Martin Horwood) has. It is a coal-fired power station that produces millions of tonnes of emissions a year-not comparable to Drax, but pretty big-and its little pilot project captures 36,000 tonnes a year. That is state-of-the-art technology, so there is a big gap and a long way to go, and the issue is not just about the technology, but about the legality. Where do we put the stuff? It is okay to say that we can put it in the North sea, which has a huge capacity, but is it necessarily correct to do so? What are the legalities of storing something in these reservoirs for centuries? Who is responsible for them over time? Is that going to be included in, or excluded from, the standard?
4.30 pm
Martin Horwood: The hon. Gentleman raises an important issue. Does he accept, however, that there is plenty of scientific evidence that there is trillions of tonnes-worth of storage capacity around the world in various geological formations, which is a very safe way to store CO2, in contrast to something such as radioactive nuclear waste, because in time it is absorbed by the rocks and aquifers?
Colin Challen:
There is a great deal of truth in what the hon. Gentleman says. However, even with the small, state-of-the-art pilot project in Germany, people have to
be convinced about having the carbon under their land. It is not always out in the North sea, which sounds very nice and offshore, as if it will never come back and bite us. In storing something like that underground, one has to find the legal methods of doing it. All these things have a long way to go in development: this is new stuff, and new thinking is required.
The trouble with new clause 15 is its time scale. It starts off by saying,
"The Secretary of State may by regulation introduce"
an EPS, but then one turns over the page, where it says,
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