Simon
Hughes: I want to confirm that the best Library note
figure is that 43 per cent. of electricity is currently produced by
gas, which is in the same ball park as the hon. Gentleman’s
information.
Mr.
Weir: I thank the hon. Gentleman for that intervention.
The point stands—it is a substantial amount and is going to be
for the foreseeable
future. I
accept that, as the Minister also made clear in evidence, new gas
stations emit less CO2 than coal, and indeed older gas
stations. None the less, we need to have CCS technology for gas in
place by the 2020s. The demonstrator, however, will not be up and
running until 2014 and some of our witnesses were very sceptical as to
whether that target would be met, which means that time is running out
for gas technology. I draw attention particularly to what Professor
Gibbins says at paragraph 6 of the memorandum. Forgive me,
Mr. Bayley, as it is a lengthy and somewhat complicated
quote, but it is
important: “The
Committee on Climate Change suggests that, for the entire UK
electricity fleet (i.e. an average of all generation sources, fossil
and non-fossil) an overall electricity emission intensity of
70 gCO 2/kWh or less will be required by 2030
(compared to an average value of around 500 gCO 2/kWh now).
This implies that fossil fuel plants should on average be
emitting around
100 g CO 2/kWh, with the lower UK fleet average resulting from
the inclusion of renewables and nuclear as very low carbon options.
Individual gas power plants will emit of the order of 350
gCO 2/kWh at full load, but significantly more if they are
running at part-load or varying load to compliment and support
wind-generated electricity. Even gas-fired CHP plants can only approach
an electricity emission intensity of 200 gCO 2/kWh, and then
only for ideal operating conditions and location with full
heat/electricity matching and with an acceptance of an accompanying
CO 2 emission from heat production. It is clear, therefore,
that any gas power plants running for extended periods in 2030 (as well
as coal plants) will need CCS in order to achieve emissions
of 100 gCO 2/kWh or
less”. That
is the important point: we will still be using gas plants into 2030 and
possibly beyond, and the older a plant is, the more CO2
it will emit. Given that older plants in particular may be put
over to peaking or emergency duties to back up other sources, they will
emit more CO2, if I understand correctly.
The professor
goes on to say that we cannot be certain of the position between 2020
and 2030:
“but in this
uncertainty fossil fuel, and particularly gas, is in effect being used
as a de facto insurance policy to keep the lights on if other
options fail to deliver—and ensuring that CCS is developed in
time for widespread rollout from around 2020 is, therefore, the
insurance policy to make sure that the UK CO2
emission target set by the Committee on Climate Change are
met.” It
seems to me that we have to take account of gas. We cannot put all our
eggs in the one basket of coal, important though I accept coal
is.
One other
potential problem that in my view shows a slight lack of joined-up
thinking is the overarching national policy statement on energy, which
is of course part of the national planning framework. Section 4.7.1 of
that statement, dealing with carbon capture storage readiness,
states: “To
ensure that no foreseeable barriers exist to retrofitting carbon
capture and storage (CCS) equipment on combustion generating stations,
all applications for new combustion plant which are of generating
capacity at or over 300 MW and of a type covered by the
EU’s Large Combustion Plant Directive (LCPD) should
demonstrate that the plant is ‘Carbon Capture Ready’
(CCR) before consent may be given. The IPC must not grant consent
unless this is the case. In order to assure the IPC that a proposed
development is CCR, applicants will need to demonstrate: that
sufficient space is available on or near the site to accommodate carbon
capture equipment in the future; the technical feasibility of
retrofitting their chosen carbon capture technology; that a suitable
area of deep geological storage offshore exists for the storage of
captured CO2 from the proposed combustion station; the technical
feasibility of transporting the captured CO2 to the proposed storage
area; and the economic feasibility within the combustion
station’s lifetime of the full CCS chain, covering retrofitting,
transport and
storage.” Section
4.7.3 then
states: “If
the IPC, having considered these assessments and other available
information, concludes that it will not be technically and economically
feasible to retrofit CCS to a proposed plant during its expected
lifetime, then the proposed development cannot be judged to be CCR and
therefore cannot receive
consent.” It
seems to me that that runs a real danger of preventing the future
development of gas-fired plant because of the lack of proven CCS
technology—unless, of course, we invest and make sure that that
technology is available and working. Making an assessment of the
technological and economic feasibility of retrofitting the technology
to a planning application is impractical and likely to produce a
meaningless assessment. Without knowing the costs, it is impossible to
specify objectively what is economically feasible.
As
I said at the outset, given that the clause as it currently stands only
refers to coal-fired generation, anyone wishing to use CCS on gas
plants will have to prove economic feasibility without subsidy. I would
also point out that as the IPC is due to come on stream before the
first demonstrator plant, that will have potentially serious impacts on
developing new gas plants.
For all those
reasons, I believe that we should accept the amendment to the Bill and
ensure that we at least leave open the possibility of CCS from gas and
other fuels. We should not be restricted to coal alone; that might have
the consequence—I was going to say the unforeseen consequence,
but it can be foreseen—of serious difficulty in the years
ahead.
Charles
Hendry: I congratulate the hon. Gentleman on moving the
amendment in that way. This is a very important part of the Bill, and
how we approach the whole subject is also important. This can either be
a rather lame Bill, which moves us forward significantly in some areas
but not enough in others, or it can be a very big, bold step forward
that will really change how we think about carbon capture and storage.
His ambition and ours and that of many other members of the Committee
is that we should be looking for the latter. We should be ambitious and
create a totally new feel about
CCS. We
have, I am afraid, missed the boat once before. The competition was too
narrowly focused. We then missed the boat on pre-combustion, and it
will be some years before we can begin to catch up in that area. The
project in Peterhead that the hon. Gentleman referred to was a very sad
loss. It was one of the most advanced projects of its kind in the world
and was ultimately lost because of the lack of Government
support.
Our challenge
must be to not make the Bill too restrictive. We should seize the
opportunity, going for the whole range of technologies that may be out
there, and doing what we can to make them happen. The challenge for the
Minister is to make this a leap forward, rather than a gradual inching
forward. The danger is that CCS will develop in coal-fired generation
capacity as a result of the Bill, but that its potential development in
gas-fired generation will be stifled because it was not included in the
Bill. We will then have to wait for another piece of primary
legislation to make it possible, while others around the world will
develop the technology. We will be stuck in a time warp, because of our
failure to make the Bill fit for purpose.
If enacted,
the Bill will be there for all time until replaced by something else.
The proposed levy is not time-limited, and there is no sunset clause.
Unless the Bill is repealed in 30 or 40 years’ time, the levy
will still be imposed, yet its sole purpose is to help to develop CCS
technologies at the pilot stage. At that point, it will clearly not be
applicable for coal. Even after a decade, it will not be applicable for
initial development. However, it would be applicable to gas, and we
must ensure that it is as broadly based as possible.
It was
important for us to listen to the evidence given last week. Above all,
the reason for those evidence sessions is to call before the Committee
those who have unparalleled expertise and to hear their views on how to
make the proposed legislation better.
I shall quote
Professor John Gibbins again. He
said: “The
reason why the Bill needs to take in natural gas is that it seems
likely that because we now have these quite stringent
targets for 2030, we will have to fit a significant amount of natural
gas plant with carbon capture and storage in the 2020s. To be able to
plan for that, you need to have demonstrated the technology and to have
the reference plants to look at and say, “This is how
it’s done,” and to be absolutely clear on what
you’re doing. That’s why you would work on
gas.” In
a further exchange, Professor Gibbins was being questioned by the hon.
Member for North-East Derbyshire. She said about
gas: “So
the answer is yes—you would want a separate demonstration
project.”——[Official Report, Energy
Public Bill Committee, 5 January 2010; c. 44-47, Q94 and
101.] Professor
Gibbins replied: “Correct.” The professor is one of the
greatest pioneers and developers in the country and internationally.
His expertise clearly suggests that we should use the Bill not only for
coal but for gas.
We know for
certain that carbon capture will be necessary at some point if we are
to meet the legally binding carbon reduction requirement of 80 per
cent. by 2050. That target can be reached only if we apply CCS to
gas-fired power stations. We know that now, so we should use this
opportunity to plan for it now and to put in place a mechanism that
will make it possible.
John
Robertson (Glasgow, North-West) (Lab): The hon. Gentleman
makes a good argument. However, I wonder whether there is a priority
for coal, whereas gas does not have the same sort of power. If I
remember rightly, no one said in evidence that gas would not be used in
future, but the priority now and the urgency is for
coal.
Charles
Hendry: The hon. Gentleman is absolutely right that the
urgency is for coal, but the Bill is specific. It is only for
coal-fired generation. The Bill specifically excludes gas-fired
generation. Although we completely agree that the priority should be
for coal, we do not want to exclude gas when it becomes the priority.
We agree about the priority, but it is a mistake to close options when
we can see that they will happen before
long.
Mr.
Weir: Does the hon. Gentleman not agree that, taking
clauses 1 and 6 together, the next CCS demonstrator plant must also be
coal-based, thus effectively ruling out gas for the foreseeable
future?
Charles
Hendry: I thank the hon. Gentleman, who makes a valid
point. One aspect, which could be covered now or in a clause stand part
debate, is that I am not persuaded that the Bill allows pre-combustion
technology at all. My definition of coal-fired generation is that coal
is burned to create the electricity; by definition, therefore, that is
only post-combustion technology. I hope that the Minister can provide
us with some legal guidance to say that, where we gasify the coal and
burn the gas, that will still be considered as coal-fired generation.
So there are areas where we need greater clarification and
guidance. 5pm
Joan
Ruddock: I can answer immediately: the hon. Gentleman is
correct.
Charles
Hendry: If that is the case, there is no such definition
in the Bill. When the definition of coal-fired generation is given in
the Bill, it does not make that clear. I ask the Minister to reflect on
that point and to
come back with an amendment, perhaps on Report, to change the definition
so that it is clear, beyond any doubt whatsoever, that that is the
case. We need to address this point not only because of the development
of gas, but because a range of other technologies and uses could
generate carbon capture and storage and one might wish to assist their
development at some point.
Mr.
Binley: Would not the inclusion of gas give a message that
is wider than the message that the Bill gives? Would it not tell
industry and commerce that this development is very much on the cards
and could happen irrespective of whether the Government want to be
involved with any of the funding and so on? If there is a feeling that
it could be on the cards, might not industry itself take up the
challenge?
Charles
Hendry: My hon. Friend could not be more right. The
opposite of that point is that businesses looking to develop
gas-related CCS anywhere in the world will look at the Bill and say,
“Britain is simply not interested in doing this, and we are
specifically excluded from any funding mechanism”. Therefore,
they will look to other countries in which to develop gas-related CCS.
Once again, it will be a case of catch-up and trying to say,
“Okay, we had a potential lead; we have lost it. How do we catch
up again?” The very simple change that is proposed by the hon.
Member for Angus would enable us to put that debate to bed, so that
people around the world would say, “Look, Britain wants to lead
in coal-fired CCS, but if you are interested in gas-fired CCS, Britain
is the place to look to do that as
well.” The
other aspect of this issue is that CCS will be relevant to a range of
other uses that are not directly related to electricity generation. In
particular, I refer to major industrial users—for example, the
chemical industry, including aluminium smelters—that need to
create an enormous amount of heat. Traditionally, they do that by
burning coal or gas. In time, if we are to deal with our industrial
emissions issues, those users will also need to have CCS.
We need those
types of businesses to invest in Britain. If we are considering a
cluster approach, we should be looking, for example, at the Humber area
and nearby Teesside, which are areas that have incredible expertise in
the chemical industry. We should say that one of Britain’s great
strengths would be to have a cluster based on the Humber, where
companies investing in the chemical sector could to tap into a pipeline
to develop CCS technologies to show that we can undertake some of the
most polluting industrial activities in a clean way in Britain. That
would be a wonderful message to send to the industrial world, but it
would not be permitted if we do not make this change to the
Bill.
We are very
keen to see CCS technology developed as broadly as possible. However,
this is the moment when the Minister has to decide whether she wants to
be timid or bold. The funding mechanism is a big step forward—we
completely accept that—but she can either say that her vision
for CCS is for coal or that her vision is for coal, gas and other
industrial uses. There is no downside to this change. In the early
stages, the levy could be used entirely to assist coal-fired
generation, but its use could then be permitted to support other
technologies in the future.
The
Under-Secretary of State for Energy and Climate Change says that fuel
poverty is the issue. There is no issue of fuel poverty in this regard,
because the levy would be set at exactly the same level. The Government
would then use that income, but when it was no longer required for
coal-fired generation, it could be adapted to be used for gas-fired
generation. To suggest that the issue is fuel poverty is a red
herring—it is not correct. We are looking for a bold response
from the Minister that will make the Bill much more important and
impressive.
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