Simon Hughes: I hope that we have helped you to start your day in good humour, Mr. Atkinson, and that you are able to continue your birthday in a good way, following the dinner that you went to in the Speakers House with another birthday boy as part of the Chairmans Panel on Tuesday.
The debate is about emissions performance standards. To which Minister should I direct my comments? [Interruption.] I thank the Minister of State for raising her hand. The subject has significant importance not only in the UK but across the EU and globally. It is not new; how we deal with carbon emissions and regulate them has often been debated generally and specifically in the context of coal-fired power stations. I am conscious that last year there was a debate in Westminster Hall on St. Patricks day.
Coincidentally, the Secretary of State for Energy and Climate Change made a statement on St Georges day, which was responded to by my hon. Friend the Member for Cheltenham (Martin Horwood) as I was abroad.
We set out our view then, and have held to it, that industry must know that the next generation of coal-fired power stations must have a system in place from the beginning that captures the carbon and so does not continue the dangerous effects of carbon emissions. The qualified retrofit option is not good enough either in protecting our planet from emissions or in giving certainty to the people developing the next generation of coal-fired power stations. We have made it clear that we do not believe that we should get rid of coal in this country as a contributor to our power supplies, but it needs to be produced and used in a way that does not create the harm it has in the past.
My right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy) introduced a private Members Bill on this subject on 3 July. It had its Second Reading on that day and the Under-Secretary of State for Energy
The consultation has happened. The response was published by the Department in November, so we are now past that. The implicit agreement between my right hon. Friend and the Under-Secretary was that it would be appropriate to come back to the matter once that process had been completed.
Simon Hughes: Indeed. We are coming back to the matter at the first available opportunity, obviously with the knowledge of my right hon. Friend, and keen to pursue the matter.
Before the end of last year there was also the report of the estimable Committee on Climate Change, Meeting Carbon Budgets - the need for a step change, which we all take very seriously and value very greatly. By any criterion Lord Turner and his colleagues do an excellent job. They have made a significant contribution to the issue. On page 134 of the report, talking about whether we can only rely on the carbon price and so on, they say:
Given our concerns we therefore recommend that:
Whether CCS is deemed proven should not be judged only on the basis of the carbon price. Rather it should be considered in the wider context of power sector decarbonisation required both in the UK and internationally, and on the basis of UK and international evidence.
To the extent that retrofit might be considered desirable in this context but would require additional support over and above what is likely to be provided by the carbon price, investors should be given comfort now that a mechanism would be introduced to provide this support.
Such a mechanism should be introduced no later than 2016 to support roll-out once the first demonstration plants become operational. Some decisions on regulation and financing structure could be made in advance of this date.
The Government should make it absolutely clear now that whether or not CCS can be deemed economically viable any conventional coal plant still operating unabated beyond the early 2020s would only generate for a very limited number of hours. Such a statement should be complemented by a review (e.g. in 2020) to determine the precise level and timing of such a limit.
That is followed by a box entitled Potential power market interventions, which describes three such interventions. The first proposal, entitled Measures to strengthen the carbon price signal, is to extend the exemption from the climate change levy to all new low-carbon generators. It also suggests a second option of a carbon price underpin. The second proposal, entitled Measures to provide confidence over the price received by low-carbon generation, suggests feed-in tariffs for low-carbon technologies and tenders for low-carbon capacity. The final proposal, under the heading Measures to ensure investment in low-carbon capacity, suggests an emissions performance standard or a low-carbon obligation.
I want to focus on the emissions performance standard. The report states:
An emissions performance standard would entail regulation to specify a maximum emissions intensity (g/kWh) of generation. This could be introduced at firm or installation level.
We have had debates about what would be appropriate and the industry has given evidence. It may be much easier to introduce the standard at installation level than across all the plant run by a particular company or consortium. I am willing to have that debate. I was grateful to the Minister of State for her response to my question about whether an emissions performance standard would be legal in European law and, therefore, in British law. New clause 5, tabled by colleagues led by the hon. Member for Nottingham, South (Alan Simpson), also argues for an emissions performance standard, and the Conservative Front-Bench team have also tabled a new clause.
The difference between the three options available is that new clause 1, tabled by my hon. Friends and me, is considerably stronger. It states:
The Secretary of State shall make provision by regulations for a carbon emissions performance standard to set the maximum level of carbon dioxide that may be emitted for each unit of output by any new coal fired electricity generating station,
and that that
shall come into effect immediately on passage of this Act and will be progressively lowered so that new coal fired power stations will produce no carbon emissions from 2020.
That is a clear position. [Interruption.] Ministers may disagree, but it is clear and it gives a clear indication to the industry a decade in advance, so there is no lack of notice. One of the Ministers reminded us in an earlier debate that the Act will be enacted two months after its passage. We believe that the emissions performance standard should be introduced when the Act is enacted so that it can come into effect this year.
Next in effectiveness, though much less effective and, in our view, not effective enough, is new clause 5, tabled by six Labour colleagues led by the hon. Member for Nottingham, South. The difference between it and our new clause is that it offers no provision as to when the emissions performance standard would come into operation. It begins:
The Secretary of State shall make provision...to set the maximum level or levels of carbon dioxide that may be emitted.
It goes on to say that the standard should be reviewed
no less frequently than every three years.
It then sets out the issues that the review should take into account, including the most up-to-date scientific knowledge and the advice of the Committee on Climate Change,
particularly in relation to carbon budgets, medium and long-term emission reduction targets, and future emissions from the electricity generating sector.
The new clause also proposes that the standard must be introduced
no later than 12 months from the date on which this Act is passed.
It would start next year and would be reviewed every three years, but the new clause does not have a specific date for implementation.
Mr. Brian Binley (Northampton, South) (Con): Does not subsection 3(a) in new clause 5 sum up the reason there is a real need for flexibility? It says that the Secretary of State must
take into account the most up-to-date scientific knowledge about climate change.
Over the last six months there has been considerable doubt about the impact of climate change, particularly the assumption that was made in the inter-parliamentary computer model to the effect that rising amounts of CO2 produced a similar rising amount of heat within the atmosphere. That seems to be in some doubt.
Mr. Binley: Let me continue. The point is that scientific evidence is in some doubt. We need some flexibility and that is why I welcome the new clause tabled by my hon. Friend the Member for Tunbridge Wells (Greg Clark), rather than the firm new clause tabled by the Liberal Democrats.
Simon Hughes: The hon. Gentleman is beginning to address the new clause tabled by his hon. Friends which I have not addressed yet. It is the weakest of them all. He has put his position on the record. He supports the weakest proposition. To put it bluntly, of course there are climate change deniers. There are more of them, as far as I know, in his party than in any of the other three parties represented in this Committee. There appear to be a significant number both in the current parliamentary Conservative party and among those selected to be Conservative prospective parliamentary candidates.
Indeed, it was distressing to discoverfrom research done not by us but by the Conservative partythat of all the issues that were thought to be important by its prospective parliamentary candidates at the bottom of the list were two things: social housing and climate change. That does not suggest that great new, radical, environmental
The Chairman: I know. I am sorry to spoil the Committees fun, but this is really getting rather wide of new clause 1.
Simon Hughes: I was just warming up, Mr. Atkinson. I have been waiting to make this speech for at least three days. But I have other opportunities in the grid.
My hon. Friend the Member for Harrogate and Knaresborough, from both his personal knowledge and his knowledge as Chairman of the Science and Technology Committee, may wish to tell us that there is not increasing evidence to suggest that climate change is uncertain. That is certainly not the advice given to the Government. It is certainly not the Governments view. To their credit they are very clear about this issue. Of course, people can naively think that because we are having a cold winter it must mean that the evidence is different.
All the burden of scientific evidence, both from the Intergovernmental Panel on Climate ChangeI have heard its chairman speakand our Committee on Climate Changewe have heard their chairman and members
Having put two of the positions, I should like, to be fair, to put on the record the third, which is the position of the Conservative party as set out in new clause 2. Obviously the hon. Member for Wealden will speak to his own new clause in a minute but it is only affair that I address it. It states:
The Secretary of State may by regulation introduce an Emissions Performance Standard.
It then defines it. It does not say that the Secretary of State shall do so, and it does not say when. It does not say what the criteria will be and so on. I think that the hon. Gentleman will accept that it leaves an option, but it is simply that. My hon. Friend the Member for Harrogate and Knaresborough and I think that that needs to be tougher and clearer from the beginning.
There is, however, one major issue that I want to raise, as the Minister of State may suspect. It concerns the legal context of these matters, which is why I have questioned her in the past. Correspondence between her Department and the European Commission on this matter has come into my possession. I have a letter dated 16 June, written by her Department and sent to Mr. Jos Delbeke, the deputy director general for climate change and air, DG ENV 1, at the Commission, on the subject of a proposed UK framework for the development of coal. That was a perfectly courteous letter explaining the Governments position after the announcement made by the Secretary of State in April. I will not set it out in detail, but it starts by saying:
We are writing to update you on progress following recent announcements by the UK government in Budget 2009 and subsequently on proposals for new measures on coal and CCS.
I also have the reply to that letter, which I will put on the record. It is a short letter from Mr. Jos Delbeke, who is a long-standing European civil servant. The letter is headed: Proposed UK framework for the development of clean coal. It states:
Thank you for your letter of 16 June 2009, in which you lay out elements of the proposed UK framework for the development of clean coal, comprising, inter alia, the following measures:
1. Requiring any new coal power station in England and Wales to demonstrate CCS on at least 300MW net (around 400MTW gross) of its capacity; as is laid out in Chapter 4 Section 1 of the Consultation paper on the framework issued on 17 June 2009, the intention is to implement this requirement through the planning legislation.
2. Requiring these power stations to retrofit CCS to their full capacity once CCS has been technically and economically proven, and new power stations to then be fully CCS from the outset;
3. Exploring options that would deliver emission reductions from coal power stations should CCS not be proven as quickly as expected. With regard to the requirement under L, Chapter 4 of the Consultation Paper on the proposed UK framework, issued
You have asked for DG ENVs views on these proposals. As you know, Article 9(3), 3rd subparagraph of Directive 2008/1/EC concerning integrated pollution prevention and control stipulates that:
Where emissions of a greenhouse gas from an installation are specified in Annex I to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community (1) in relation to an activity carried out in that installation, the permit shall not include an emission limit value for direct emissions of that gas unless it is necessary to ensure that no significant local pollution is caused.
DG ENV takes the view that this would rule out the introduction of any emission performance standard, cap or limit value for direct emissions of CO2 falling under the definition of emission limit value set out in Directive 2008/1/EC in the permits to operate installations covered by Directives 2008/1/EC and 2003/87/EC. I am looking forward to a continued dialogue on these issues in the coming months.
The key point, as the Minister will have heard in the penultimate paragraph, is that
DG ENV takes the view that this would rule out the introduction of any emission performance standard, cap or limit value for direct emissions.
Unsurprisingly, I have some questions for the Minister. Given that the reply is dated September, why did the Government not refer to the letter when they published their coal policy on 9 November? What steps have the Government taken since 9 November to ensure that their proposed policy for coal will be exactly in line with the recommendations of the Committee on Climate Change?
Is it enough, given the correspondence that I have cited, for the UK to rely on its own legal advice? The advice may be different from that given to and by the Commission. What communication has there been between the lawyers here and in Brussels? If the Governments legal advice is wrong, it would still be possible, according to the Commissions letter, to use the UK planning regime to do something about the situation before it is too late. I accept that it would be possible to plan in advance and say that emissions above a certain amount will not be allowed as part of the planning condition.
I understand from the Under-Secretarys response to the debate on the private Members Bill in July, and from other dialogue, that the Governments contingency plan for an EPS option would be for a CO2 emissions performance standard by way of a plant-level cap. If that plan is found to be illegal under European Union law, there would clearly be no way of controlling or reducing the CO2 emissions from any coal power station in the UK once it had been granted consent. The Committee will therefore understand the concern of my hon. Friend the Member for Harrogate and Knaresborough and I about the danger that people would be trying to close the stable door after the horse had well and truly bolted.
That would also mean that the UK would not be able to follow the recommendations of the Committee on Climate Change, which apply to both new and existing coal power stations. A new station, such as the proposed 2 a year indefinitely. Without an emissions performance standard, and if the Kingsnorth CCS project fails to meet the targets, the obligations and duties created by the Climate Change Act, which this country, to our credit, passed in 2008, would be rendered sterile and meaningless. E.ON has said, on the record, that if there is to be an emissions performance standard, it wants to know what it will be at the outset so that it can make an investment decision. The Government, however, have not done that. Why have they not made that indication? We know E.ONs current position in the market and in relation to Kingsnorth.
It seems to us that a rolling review in 2018the position described by Ministers the other daywith the threat of an uncertain regulation thereafter, creates more questions and problems than it answers. That is our criticism of the new clause tabled by the hon. Member for Nottingham, South. Although it has the support of some reputable voluntary sector organisations, I think that they are misguided about the new clauses logic. After extensive public consultation, we still do not know what the appropriate conditions for any new coal power stations will be. That is hopeless if we are trying to plan the future of an industry into the decade beyond this one.
The rolling review is also a hanging axe that will deter much-needed investment in new coal and CCS. That is clearly undesirableI could be stronger about itespecially when we now know that it is considered technically possible for new, commercial coal power stations, such as the Powerfuel 900 MW project at Hatfield, which has been supported by the European Union, to capture 90 per cent. of CO2 emissions from the outset. We now know the EUs view and that it had indicated it to the Government. Apart from the questions about why we were not told of the Brussels position earlier and why it is only coming to light now, is it the caseI hope it is, because, as the Minister of State knows, I respect her greatlythat the Government have been trying to ride two horses? On the one hand, are they creating the impression here that they are being tough and determined about the issue, knowing over the past few months that the European Commission would not allow them to carry out their proposed policy; and, on the other hand, have they been unwilling to stand up and take on the Commissions position, which needs to be challenged, on the issue? Ultimately, this might have to be taken to the courts. We take the view that this is sufficiently important to be taken, if necessary, to the European Court, so that the dispute between a member statethe United Kingdomand the Commission can be resolved.
If the UK is to take the lead in Europeand I commend the Government for the intentionthen it is necessary to take on the civil service or the European Commission on this issue. I am an enthusiastic European, but that does not mean I think every single decision or view the EC takes is correct. I have never taken the view that there ought not to be robust participation in the processes by member states.
The legal problem of how to regulate CO2 emissions from coal power stations in Britain must be resolved publicly, positively, urgently and ideallyI see no other opportunity before the general electionby this House in this Energy Bill, before consent is granted to any new coal power station. This is not meant to be provocative,
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