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Mr. Willis: The whole point of this debate, Mr. Atkinson, is to discuss whether CO2 in the atmosphere creates greater heat and thus a need for the technologies that we are talking about. I am saying to the hon. Member for Northampton, South, that there is absolutely no doubt whatever about the science. CO2 multiplied by heat creates a rise in temperature—full stop. There is no doubt about it. Every scientist can prove that very simply.
Mr. Binley: Will the hon. Gentleman give way again?
Mr. Willis: No. I am trying to finish the point.
Mr. Binley: You are being very provocative.
Mr. Willis: No, I am not. I am a nice chap, really.
There is no doubt about the science. There is no doubt that the sun is a heat source. That, too, is scientifically and absolutely undeniable. If one puts a heat source in with CO2, there will be an increase in heat. What cannot be proved, of course, is what the effect of that heating will be on the earth’s ecosystems. That is where the modelling comes in. The model from the university of East Anglia, to which the hon. Member for Northampton, South, referred, is but one model, using one data set.
The Chairman: Order. I have to tell the hon. Gentleman that the debate is straying far from the subject. I ask him to return to the new clause; otherwise, I shall have to be a little firmer with him.
Mr. Willis: I simply make the point that there is no doubt. We are trying, in new clause 1, to get the Government to admit that it is unacceptable for the Bill to leave Committee without an ETS proposal having been included. Unless there is a clear timetable for Governments to achieve those objectives, the industry will not have security, and nor will we.
The hon. Member for Wealden made a vital point. What would happen if a company built a plant without having a clear direction on emission standards? The idea that, in two, three, five or 10 years, the Government would say to it: “Unless you meet the standards, we will close down the plant” is nonsense, for the very reasons that he gave about the lights going out. Unless the standards are locked in at the beginning of the system, and companies are given clear direction, we will not achieve our objectives, and that is why new clause 1 must have clear standards for the future.
The move to a low-carbon electricity system is critical to the delivery of our climate goals and the Government’s low-carbon transition plan, which was published last summer and which sets out our overarching strategy. Our approach considers both how we can use energy more efficiently and how our energy is supplied. Emissions from the power sector are already regulated through the emissions trading system, which is at the heart of our domestic and EU efforts to tackle climate change.
We have worked closely with the European Commission and member states to significantly strengthen the scheme from phase 3—which starts in 2013—onwards. For example, there will now be a centralised EU-wide cap, ensuring 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 draw those matters to the Committee’s attention advisedly, because they are at the core of the strategy and we always have to consider any new proposals, such as the emissions performance standard, in that context. We recognise, however, that the EU emissions trading scheme is not sufficient. We must, in parallel, take action to remove barriers to the development and deployment of low-carbon technologies, namely new nuclear, renewables and clean coal.
As we have said consistently, tackling emissions from coal is a priority. Coal is the fuel with the highest carbon emissions, yet countries across the globe are set to use increasing amounts for electricity generation. That is why we are legislating in the Bill for a new CCS incentive to support four demonstration projects. We have already put in place the most environmentally ambitious package of policy measures for clean coal of any country in the world.
We require any new coal power station to demonstrate the full CCS chain—capture, transport and storage—at a commercial scale of around 400 MW of their output; that is a minimum. Requiring that scale of CCS at this stage in the development of the technology is ambitious and goes beyond the scale of most projects planned elsewhere, but we believe that it is feasible. Modelling suggests that the carbon emissions from a demonstration programme of the scale that we are planning would be similar to those from the alternative gas generation that would be displaced.
We will maintain a rolling review of progress as regards CCS technology and, by 2018, will publish a report that considers the case for new regulatory and financial measures to drive the move to clean coal. In our public consultation, a common argument advanced by respondents was that we first need to demonstrate CCS and develop a better understanding of its potential. They were also concerned that the introduction of an EPS now, while uncertainty remains about CCS, would deter investment in new power stations that would form the basis of demonstration plants. That is clearly a very important consideration.
It is also worth noting that an EPS is not the only option for reducing emissions from coal power stations. In our consultation last year, we included other options: a cap on carbon dioxide emissions from individual coal power stations, allowing coal plants to emit up to a specified amount of CO2 each year, over a number of years; and a running hours limit on coal power stations. We also need to remember that we expect coal power plants to retrofit CCS to their full capacity by 2025, with the CCS incentive able to provide support. Such measures will be looked at as part of the rolling review.
Simon Hughes: I may be anticipating something that the Minister is planning to say, but before she sits down will she ensure that she gives the Government’s view on the other two matters that were part of the consultation—the cap and the hours limit?
Joan Ruddock: The hon. Gentleman has asked me a lot of questions, which I shall endeavour to answer in due course.
I want to record that, as the hon. Gentleman said, the Committee on Climate Change has also listed in its first report a number of options to ensure that future power generation is low carbon. We do not have the time at the moment to go into the detail of all of them, but possible options included—again, as the hon. Gentleman mentioned—a carbon price floor, which I imagine we shall discuss later, a feed-in tariff and a low-carbon obligation, as well as an emissions performance standard. The hon. Gentleman sought to bring the support of the CCC to his new clause, but the fact is that the CCC has set out a range of options and has not said that an EPS is the one way forward.
Given the possible effects on issues such as security of supply and consumer bills, considering the options carefully will be important before deciding whether to implement any of them. In the same report, the CCC recommended a review in around 2020, which should consider additional regulation of emissions from coal power stations. As I said, it did not suggest that an EPS was the only course—or, indeed, that an EPS should be introduced now.
We have considered the full range of evidence submitted to us, including the CCC’s advice, and thought about the risks to investment raised by the introduction of an EPS now. Having put those considerations against the absolute global imperative of demonstrating CCS on a commercial scale as soon as possible, we decided to commit to a review of the regulatory framework for coal power stations by 2018. In line with the CCC’s advice, we have also clearly stated our expectation that, with or without CCS, coal power stations will need to reduce their emissions substantially if they are to continue operating in the 2020s.
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It is clear that an EPS could be part of our emissions strategy in the future, but implementation now would be premature. That does not mean that we are being idle. We do ask ourselves whether we are doing enough, which question I hope will be answered when we publish, in the spring, the 2050 road map that will set out further pathways to a low-carbon UK.
As we know that the scale and pace of the change needed will test current energy market arrangements, particularly those for the electricity market, we are assessing in parallel the operation of the energy policy and market framework, to ensure that it will deliver the investment necessary for affordable and secure supplies of low-carbon energy. It is too early to say what measures, if any, might be proposed as a result of that work, but we will set out initial findings in this year’s Budget.
New clause 1 would introduce an emissions performance standard for new coal power stations and defines a pathway that would require emissions to fall to nothing by 2020. The hon. Member for North Southwark and Bermondsey needs to come clean about the consequences of the new clause: no emissions means no new coal. Without new coal power stations, we would not be able to demonstrate CCS, and coal would not be in the mix for the future. A coal power station is a long-term investment. No company would invest if it knew that it would have to close its station down within five years of starting, as would be the effect of the new clause. As I said, no new coal power stations risks no demonstration of CCS in the UK.
That matters for several reasons. First, CCS has the potential to play a critical global role in tackling climate change, and developed countries must take a leadership role in driving the technology forward. Secondly, fossil fuels play a vital role in providing us with secure energy supplies in the UK, and CCS will enable that role to continue. Through the demonstration programme, we will start to establish the expertise and infrastructure needed to enable wider roll-out of CCS as soon as possible. Finally, by acting early, we will open up opportunities for UK businesses in a major future market, sustaining between 30,000 and 60,000 jobs. I must say to the hon. Gentleman that there is no way that new clause 1 could be acceptable.
Dr. Whitehead: To what extent are utility companies’ total emissions across their activities limited under the national allocation plan? To what extent will those companies’ future investment choices be guided by their overall emission limits, as far as the quantum of emissions is concerned, in order to stay in line with their overall allocations and those that they will presumably have on a title basis under future ETS arrangements?
Joan Ruddock: My hon. Friend, as always, makes an extremely valid point. He is absolutely correct. That is why we must keep reminding ourselves of the centrality of the EU ETS.
Proposed new clauses 2 and 5 envisage the introduction of an emissions performance standard to restrict carbon dioxide emissions from all electricity generation plant. New clause 2 takes a fairly broad-brush, enabling approach, while new clause 5 gives Ministers less discretion over how to proceed and requires a review every three years. Both the proposed new clauses would not only create risks for investment in new coal but could delay or deter investment in new gas generation.
I was asked a number of questions about the correspondence with the EU and whether we could do what we told the Committee we would do. The letter from the Commission only specifically refers to its view that an emissions limit value in two particular kinds of permit is against EU law; we believe that we can still use our legislation. More broadly, the Committee should recall that member states have the power under the EU treaties to go further than EU environmental legislation if they deem it necessary to protect their own environment.
I was asked why we did not refer to the letter from the Commission. It was because it was just one element of ongoing correspondence and we have not accepted entirely what the Commission has said. We have written again setting out our final policy and we await a response to that. We do not think it is appropriate at this stage for us to be picking a fight with the EU. We are confident in our own legal advice. We need to continue with the programmes that we think are appropriate and until we are told otherwise, we think the Commission may be content with our proposals. If it is not, then it will be a matter for it to take up legally.
Simon Hughes: Will the Minister be kind enough to circulate the remaining correspondence, either in that series or other relevant correspondence, so that we can all see before Report what the position is?
Joan Ruddock: I shall certainly look at that request. As I have indicated, we wrote to the Commission in November setting out our final policy. So far, it has not objected. There is nothing more to circulate at this stage, but the letter included references to our contingency policy and the possibility of an EPS. I think I may have answered most of the other questions.
I want to conclude by saying, once again, how committed the Government are to meeting our climate change goals, including delivering the required decarbonisation of the electricity supply. I do not believe that these new clauses are necessary to further those aims.
Simon Hughes: We are coming near to the end of the first part of today’s proceedings. I am grateful to colleagues for their considered and helpful response to this very important debate. It would be unfair, given the number of other new clauses to be discussed during the longer sitting later today, to deal with these new clauses at length. But I should like to confirm that we are aware of the technical points that the hon. Member for Wealden made; they were picked up by my hon. Friend the Member for Harrogate and Knaresborough. If the Bill were to have such a new clause—and we think that it should—the point that one cannot get an absolutely perfect, insulated, watertight, 100 per cent. guaranteed system would not be a barrier to having a system that allows for that inevitable escape. So that modification would need to be made.
It also seems important to make sure that, although it is less technical than arguments about the timing of the implementation, the question about having the capacity to increase the power supply from the coal-fired power station sources should be addressed. Those issues will be reflected in our decision about what we do with the new clause at the end of my contribution.
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The Chairman adjourned the Committee without Question put (Standing Order No. 88.)
Adjourned till this day at One o’clock.
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