The proposals for national policy statements on energy - Energy and Climate Change Contents


Examination of Witnesses (Questions 500 - 510)

WEDNESDAY 27 JANUARY 2010 (morning)

MR SARWJIT SAMBHI, DR KEITH MACLEAN, MR RUPERT STEELE AND MS JANE SMITH

  Q500  Mr Anderson: Dr MacLean, in your evidence you suggested that the NPSs should not contain proposals for CCS readiness. Why do you say that?

  Dr MacLean: We believe that the advice that is given in the NPS at the moment to the IPC sets a hurdle that it is just not possible to get over at the moment. That particular point is the reference to the need for the developer to show the commercial viability of the retrofitting of CCS to any combustion plant. We all know at the moment that we are struggling to get four demonstration plants put forward in order to demonstrate the technical and commercial viability of the technology. Therefore, if you have a requirement to have shown that as part of the advice to the IPC, at the moment that is not something that anybody can demonstrate. The logic for us of having that in there is that at the moment it will not be possible to gain consent for any combustion plant project other than the four demonstration plants where the Government has said it will provide the commercial viability through the CCS levy. For all others, whether it is biomass or gas, that hurdle cannot be met, and technically saying to the IPC, as it does, "Without the developer having proven that to you, you must turn down the application", means that there is effectively a moratorium on the development of gas or other combustion plant projects at the moment, which I am sure is not the intention but is the logical conclusion that we have come to in reading the NPS as it is currently drafted.

  Q501  Mr Anderson: So if there was final support from the Government for other forms, for demonstration plants in effect for gas or biomass, you would feel happier.

  Dr MacLean: Effectively the Government would have to underwrite any cost that is required for retrofitting to a combustion plant project in the way that it has for the four coal ones for us to demonstrate that that will be commercially viable. With the volumes of gas in particular that need to be built, that just seems like a commitment that even the Government would not be able to give to that sort of bottomless pit of cost that might be required to retrofit CCR to any plant.

  Mr Steele: We have identified this issue and commented on it in our response to the Government's consultation on CCR. We think that it is possible on a kind of scenarios basis to write a case that is capable of acceptance, although we do agree with SSE that the wording is defective. We have put forward a planning case around Damhead Creek 2 which addresses this issue and so far has not been rejected by DECC under section 36. I am not sure I would put the matter quite as starkly as Keith does, but it is the case that the requirement to say that the retrofit is commercially viable is an over-implementation of the directive and, in our view, should be struck out. That does not mean to say we believe that the CCR requirement generally is inappropriate; I think it is just a mistake in the way—

  Q502  Paddy Tipping: Can we put this in more simple terms for me—I am struggling with this! Carbon capture readiness has two tests, does it not? Is it technologically going to be able to deliver? Are we going to do some work on that?

  Dr MacLean: Yes.

  Q503  Paddy Tipping: We are going to sort that out. Is it commercially viable? That is the bit that is difficult, is it not?

  Dr MacLean: Absolutely.

  Q504  Paddy Tipping: Because we have not got a clue, to put it bluntly in my terms, whether things are going to be commercially viable in the future.

  Dr MacLean: Absolutely. To clarify, we are not opposed to the carbon capture readiness clause or a requirement in terms of having the physical space and those aspects; but it is particularly, as Mr Tipping is saying, setting that hurdle of being able to demonstrate commercial viability. We just cannot do it.

  Ms Smith: What we are saying is that it needs a phased approach. Until you can prove that it can work at a commercial scale, then the industry is just not in a position to comply. We support it; we want it to work, and we are going to be actively involved in making it work, but let us have a commitment in the NPS that says that, and as soon as it is commercially viable, then it comes in.

  Q505  Mr Anderson: The question is about getting the words right rather than the intent.

  Ms Smith: Yes.

  Q506  Mr Anderson: Clearly, you are very much aware that some of the opposition, to do with anything on coal or gas, the real intention is to build some power stations and then say, "Oh, because we are desperate for supply we will let them go unabated." We are clearly not going down that line by suggesting taking this out.

  Dr MacLean: Absolutely not.

  Mr Sambhi: It is in the overarching statement at 4.71, the last bullet point, where we are saying the criteria is that it has to be economically feasible. It is either elimination of that or significant re-wording that is required.

  Q507  Mr Anderson: Can I ask you about the specific other issue, which is not in here, and that is about guidance on the transmission and storage for gas in particular. Do you think that should be in?

  Ms Smith: Yes, absolutely. CO2 pipelines and storage are absolutely essential, as I mentioned earlier. As far as we understand, we believe it is just a simple omission, and that DECC will certainly look to include them, because obviously we need to take the carbon dioxide away and store it in a secure underground storage space.

  Q508  Sir Robert Smith: What needs to be done and how long do you think it is before we will be able to say that there is commercially viable carbon capture, because without that coming across the horizon then we are going to be locking ourselves into a high carbon generating system.

  Dr MacLean: If you look back at the records of the Energy Bill Committee discussion we had on this one, none of us were drawn on a date on that because it is not clear yet.

  Mr Steele: We have a proposal around Longannet power station, which will have a demonstration up and running by 2014, and that will give people a great deal of information about the costs and performance of CCS if it goes ahead. We think that is the fastest and surest way of getting the information. Whether ultimately we will need to fit a lot of CCS on gas, I think is a moot point. It depends how intensively the plants are used. If you envisage a world where you have got a lot of nuclear and a lot of renewables and gas is filling in the gaps, then your overall CO2 across your electricity portfolio could be quite low, even if the gas was not abated, and the cost per tonne of CO2 of abating a gas-fired power station that is only used 25 per cent of the time might be truly scary. I think that is a debate that we will need to have as we evolve our knowledge of what is happening in the future.

  Q509  Mr Weir: When this issue was debated in the Energy Bill Committee the Government's response to gas was that research had been done elsewhere rather than in the UK and gave Norway as an example of that. Are you following research on gas abatement from other areas as something that may be necessary to secure, or is it the case that you would only put in CCS in your stations if there was a subsidy for it?

  Dr MacLean: As a general principle we are obviously following international developments. I do not have anything specific on that but we would want to look at that. Centrica and ourselves had quite advanced plans for some initial demonstration work on gas, and we want to see that progressing. If it is not possible under the CCS levy in the UK, then we will have no alternative but to look at international developments.

  Mr Sambhi: From our perspective, we exited our clean coal project, and whilst we are still looking at the long-term feasibility of it our view is that we have to see the demonstration plants work before we have a clear view of whether we would re-enter.

  Q510  Paddy Tipping: I just want Jane to coordinate things and drop me a note after the meeting about when these NPSs should be reviewed. What would be the trigger point for the review? Secondly, how far can the Secretary of State come in and change the NPS by directive? It is an area we have not had a chance to cover today. Jane, would you talk to your colleagues about that? If you need more information, Rob will supply you with the questions but not the answers!

  Ms Smith: I think, Mr Tipping, we can provide you with some helpful answers.

  Paddy Tipping: I am grateful to you all for coming. It has been quite an interesting discussion, particularly around CCS, where clearly we have got a lot more work to be done. Thank you all very much indeed.






 
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