Joan
Ruddock: Any company that sought to develop any project of
any size could do so if it used its own resources. Gas-fired stations
could therefore become pilots for CCS. However, the Bill will establish
a levy, so, as my hon. Friend rightly asks, what would it mean to
produce an additional amount of money to fund an additional station? We
have indicated that it costs between more than £7 billion up to
£9.5 billion to support four coal-powered stations, so it would
be easy to work out what it would cost to support a fifth station if we
thought that the sums of money were equivalent, but that is something
that we cannot say. We believe, however, that gas would be more
expensive than that, thus significantly increasing the levy and
consumer
bills. Timing
is another issue. I have given many reasons why coal should be a
priority, but surely timing is an additional reason. The timing is very
important, because coal is so polluting. Coal-fired stations will have
to close down for a variety of reasons under other legislation. If we
are to replace and retrofit coal, we have to do it in the coming
decade. That is clearly the absolute priority. However, we can
accommodate gas to a large degree and for a longer period within the
emissions limits that we have set this
country. We
are considering CCS for gas at a later stage. Once that is clear, it
will be possible to have a debate about whether we need a levy system
to support gas at some point in the future. Moreover, do we think that,
by the 2020s, the carbon price and technology learning might be such
that a levy would be commercially viable in its own right? None of
those things is known today. There is no denial of the needs of gas,
but they are in a different time frame, and we have time in which to
make those
decisions. Dr.
Alan Whitehead (Southampton, Test) (Lab): Does my hon.
Friend agree that that is precisely the point made in Professor Jon
Gibbins’s note to the Committee about the time scale for gas and
the extent to which coal-fired stations would not be built as a result
of the large plant directive? Does she also agree, in view of a recent
study by Centrica, that the potential to place renewable gas into the
gas supply system is considerable? It would further mitigate the carbon
emissions of gas and therefore place it further back in relation to the
priority of
CCS.
Joan
Ruddock: My hon. Friend, as always, makes cogent
arguments, and I am grateful for his
support.
Anne
Main: I am reading with interest the fact that the Bill
mentions only four projects and that anything else seems to be
envisaged in a potential new Bill. That is wasteful legislation. It
would be so much easier if the
Minister considered a similar phraseology to that about the
administrator and put something like “may at some point”
include other fuels. That would simply remove the need for another
piece of legislation in
future.
Joan
Ruddock: The hon. Lady proposes something that is not
before us. We are debating the amendments that remove all reference to
coal. I hope that I have by now made my position clear on that
matter.
Simon
Hughes: I understand the Minister’s argument. Can I
be clear, however, that there is also one other bit of mutual
understanding? Is it the Minister’s wish that, as a result of
her four demonstration projects, we will have the technology to ensure
that all future coal-fired power stations, or continuing coal-fired
power stations that carry on past 2020 or thereabouts, will use CCS?
This is only a demonstration, so that the whole of the industry can use
it. I hope that that is the common understanding. There will
potentially be many more than four coal-fired power stations, but there
will simply be four places where they trial and work up to final
projection, so that everybody can then nick the technology and use it
for the future. That is what she means, is it
not?
Joan
Ruddock: Yes. We need to be clear, however, that we are
talking about support through a levy that is specific to
demonstrations. We have included—this is critical—that if
decisions were taken to this effect, the levy system could further
provide for bringing the whole capacity of the demonstrator stations up
to 100 per cent. of
CCS.
Mr.
Ellwood: So it is not just four—the levy keeps on
being
paid.
Joan
Ruddock: No, no. It is the
four.
Mr.
Ellwood: Does it say that in the
Bill?
Joan
Ruddock: I am explaining that the Bill will create all the
frameworks. It will create the possibility of having the levy and all
that goes with it. We have said clearly that we believe that that is
required for coal-fired, pre and post-combustion. In addition, when the
demonstrator shows, as we hope that it will, that the different
stations can function and that it will be possible to move to 100 per
cent. coverage, the levy system could be used to support the
retrofitting of the rest of the stations.
We have not
got a provision in the Bill, or an intention that would come through
regulations, to do other things with the levy. The levy is limited to
what I have just described. As for other stations, learning and
bringing retrofits would be a matter for the market at the time. We
have a rolling review going forward to 2018, so we will be able to see
what else may or may not be required to support
CCS.
Several
hon. Members
rose—
Joan
Ruddock: One, two, three and four, and then I want to make
progress and not give way any more.
Simon
Hughes: I hope again that there is common agreement that
the Minister would say that the Government’s strategy, which we
would support, is that once the technology and the demonstration has
been established as working, the next generation of coal-driven power
stations would not seek or be given any Government subsidy or levy by
collection, because the technology will already have proved successful.
The idea is to prove that it can work and then leave the markets to pay
the full price. That is what I assume the Minister is
saying.
Joan
Ruddock: I think that I may have said that this
morning.
Mr.
Willis: It has been helpful for the Minister to make clear
the Government’s position, but I take her back to a key point.
She said two things this afternoon: first, she said that Government
policy is to do with energy security, then she said it is to do with
the energy mix. Energy security means that the source of the energy is
controlled by the UK. That is why we have gone partly into
nuclear—we can control that source, which involves small amounts
of nuclear material. Coal brings me back to the point made by the hon.
Member for Glasgow, North-West: unless we use UK indigenous coal, we do
not have energy security in the sense that the Minister talked about
nuclear energy. Would the Minister welcome an amendment, or perhaps the
Government could table a proposal, stating that those four
demonstrators—they are being paid for by a levy, which is on UK
customers only—would have to use UK coal as part of that
demonstration?
Joan
Ruddock: My guess is that we would contravene some trade
laws if we attempted to do that, so there would be no question of doing
it. However, if we do not produce the levy and enable coal to be clean,
there will be no future for the UK coal industry. That is the way that
we—
Mr.
Willis: That is a different
issue.
Joan
Ruddock: No, no. This is important, because it is about
incentivising the industry and we incentivise it by making that change.
The hon. Gentleman says that we have no energy security, but energy
security is based on the fact that some of the coal is produced here.
There is the potential for more to be produced here. In addition,
achieving the mix means better security in terms of
generation and protecting against failures in other
plant.
John
Robertson: The problem with coal-fired power stations is
the type of coal that has to be burnt. The dirtier coal is not suitable
for our power stations at the moment and therein lies the problem.
However, that should be looked at in the future, so that we use UK
coal.
Will my hon.
Friend the Minister tell me when the EU emissions directive comes in
for coal-fired power stations? One problem that I am aware of is that
2015 was a deadline for some of the power stations to be closed down if
they did not meet the criterion of being clean enough. Longannet is one
of those power stations and is the biggest in the nearest trial area to
me. Do we
have a problem in that, even though we get those trials, we will have to
start to shut down coal-fired power
stations? Joan
Ruddock: That is indeed my understanding. From
recollection, I said this morning that I thought five coal-fired power
stations would have to close by 2015. Nobody has corrected me, unless
this piece of inspiration is a correction. No, I am right. Five
coal-powered stations will have to close by the end of 2015 as a result
of the large combustion plant directive. I am afraid that that is the
case, but it has always been what we expected to
happen. We
are looking forward to make it possible for replacements to occur and
for new coal to come on stream. Given that a third of the coal used for
generation in coal-fired power stations is produced in the UK, we think
it important to secure the future for that production. I
think—again, I speak from memory—that about 6,000 people
are employed in that
industry.
Charles
Hendry: The Minister has been very generous in giving way.
We completely agree with her that coal is a priority. We completely
understand that the focus will be on coal. However, this technology is
moving fast. We have some of the most innovative companies in the world
involved in gas in the UK—BP, Shell, Centrica—and they
are developing how CCS could be applied to work with gas as
well. Essentially,
the Minister is saying that because she insists that the levy can only
ever be used for coal-fired generation, it is not really worth those
companies doing that work in this country unless they can do it
entirely without support. We are not trying to move her away from the
priority—we accept it—but in a world where it is likely
in 2020 that 50 or 60 per cent. of our electricity will come from gas,
surely it makes sense to include that ability in time to use the levy
for the development of gas CCS, rather than requiring new
legislation. 6
pm
Joan
Ruddock: There is a real difficulty in responding. I
understand where the hon. Gentleman is coming from, but we made a
decision about the number of projects and the size of the levy that can
be raised and is sustainable. At the moment, we cannot move away from
that to include additional stations at some time in the future. We
cannot look further forward and do not seek to commit more money
through a more punitive levy. Given those limits, which are
appropriate, four coal-fired power stations are
appropriate. I
see the hon. Gentleman’s point about not passing primary
legislation again to include gas. If it were that simple, I would be
attracted to the proposal, but we cannot, at this stage, envisage that
the same mechanism would be appropriate at a later date. How much would
be required, how many stations and what kind of technology would be
appropriate for gas? There is more than one possible technology, as he
knows. We
are not dealing with legislation that we can add gas on to. If gas is
to be supported at some later stage, that will require primary
legislation because there will be many other factors involved. This
matter is not as simple as the Bill in its current form becoming
applicable to gas. As I have said repeatedly, we are talking about a
15-year cycle and the rolling review process will determine when it is
appropriate to look at further applications of
CCS. I
do not think that I can satisfy the hon. Gentleman, but I hope that I
have at least made it clear where the Government stand. That is not to
say that we do not recognise the fact that to decarbonise electricity
supplies fully, we may also need CCS for gas. As I said, our
requirements for carbon capture readiness extend to all power stations
over 300 MW, and that includes
gas. We
are putting in place measures that will enable us to move relatively
quickly to CCS on gas power stations at some point in the future. I
have made the point, and I think I need to repeat it, that we should
not forget that there are other demonstration projects in Europe and
globally. We expect that those will include some demonstration of CCS
on gas
generation. Facilitating
the global roll-out of CCS to the levels required to tackle climate
change will require global co-operation. Therefore, we expect that the
benefit from the learning developed by demonstration projects in other
countries, in the same way as we intend to share the learning developed
here, will be an important aspect of the overall development of
CCS.
For the
reasons I have laboriously set out, we do not intend to provide
financial support for the demonstration of CCS using gas-fired
generation in the near future. Consequently, I do not believe it
necessary to widen the provisions of this part of the Bill in that
respect. I hope, therefore, that the amendments will not be pressed to
the
vote.
Mr.
Weir: We have had a full debate on the issue and poked it
from every possible angle, but I still do not understand the
Minister’s position. We all agree that the priority is coal.
There is no dispute about that and it is clear that the first
demonstrator will be coal. All the amendments would do is open up the
possibility of also looking at gas, if that proved a more
attractive
option. The
Minister tells us that there is research on gas CCS being done
throughout the world, but, as I mentioned earlier, the same can be said
of coal. We do not know which will be the most attractive technology.
It seems to me that the Government are doing exactly what
they tell us they never
do—picking winners among
technologies. This
is not an attempt to undermine research on coal or an attempt to put
gas in the Bill. It is merely an attempt to leave our options open,
given, as we said earlier, that 42 per cent. of our electricity already
comes from gas. This is an issue that we need to look at, and I would
say that we need to look at it in the relatively near
future.
Dr.
Whitehead: Does the hon. Gentleman appreciate—I am
sure he does—that we are talking here about a levy for a
specific purpose, which is to get the most bang for the buck, as it
were, in bringing on to viability a technology that will make any form
of mineral-based power generation acceptable in the low-carbon economy?
That is what this measure is about. Therefore, it seems to make a great
deal of sense to go first for coal. We know that coal is much more
carbon-intensive than gas, we know that we have to get this carbon
capture technology in
place rapidly and we know that such technology can be applicable to
other forms of generation if it can be shown to
work. Under
those circumstances, therefore, I would have thought that matching a
levy, which we presumably wish to bound—we have already said
that we wish to bound it—with a number of projects that
prioritised coal in such a way would benefit gas, because the levy
would show how that mineral-based energy generation could continue to
be part of the fuel economy. In any event, clause 6(4)(b) says
“by coal and biomass”, which may be of relevance to the
hon. Gentleman’s
argument.
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