Emissions Performance Standards

Memorandum submitted by Prospect (EPS 12)

Introduction

1. Prospect is a trade union representing 122,000 scientific, technical, and managerial and specialist staff in the Civil Service and related bodies and major companies. In the energy sector, we represent scientists, engineers and other professional specialist staff in the nuclear and radioactive waste management industries, the wider electricity supply industry and, increasingly, also in the gas industry. Our members include experts developing carbon capture and storage technologies and those with regional responsibility for promoting sustainable energy systems. They are engaged in operational and technical management, research and development and the establishment and monitoring of safety standards, environmentally and in the workplace. We are fortunate in being able to draw on this broad range of knowledge and expertise to inform our views.

2. Prospect welcomes the Select Committee’s decision to investigate the effectiveness of Emissions Performance Standards (EPS). We believe that the need for action to deliver secure and sustainable energy policies is urgent, and that a step change in policy is necessary to deliver the necessary emissions reductions to curtail dangerous climate change. Control of carbon is the key issue and, with growing evidence that ‘cap and trade’ schemes do not work to maximum effectiveness, we believe that ‘cap and regulate’ should also be an option.

3. It is against this background, and our longstanding support for investment in a secure, balanced low carbon energy supply for the UK, that Prospect convened an expert-led seminar at The Royal Society in October 2008 to discuss ‘The Future for Clean Coal’. At that seminar Charles Hendry, then Shadow Minister for Energy, stated that ‘To me this debate is not about whether clean coal is possible or desirable. The fact is that it’s vital. Our job has got to be to push forward and deliver it because we are 35-40% dependent on coal for the generation of electricity. We will continue to be an economy reliant on fossil fuels and hydrocarbons for many years’. The report of this seminar is enclosed with the hard copy of this evidence and can be accessed at http://library.prospect.org.uk/id/2009/00025

How effective is an EPS likely to be in driving forward the development of CCS technology?

4. As set out in Prospect’s seminar report, there are a number of factors that would help in driving forward the development of CCS technology. We do believe that there is a role for the market. However, as Charles Hendry stated ‘If the government leaves it purely to the market there is a real risk that homes and businesses will be left without fuel or energy in a few years to come’. He argued persuasively for an EPS to set a clear direction for investors of what the industry is working towards and what is required of it. Prospect has certainly supported the need for a clear, long-term and stable policy direction to support investment decisions. In addition, government should be prepared to commit public financial support, at least at demonstration stage to prove that the technology works to scale. Among other issues that need to be addressed, practitioners at our seminar identified a clearer regulatory policy framework for key issues such as long-term liabilities and greater clarity around health, safety and environmental issues in order to reduce design and other costs.

Could the introduction of an EPS pose any risks to the UK’s long-term agendas on energy security and climate change?

5. Against this background of broad support, we do want to sound a note of caution about the potential practical implications of introducing an EPS. For example, the technology within gas turbine plant is such that installed plant would require significant and costly adjustment to achieve the EPS aim of reducing or restricting emissions. This would affect energy security as all plants were modified within similar timescales. A move to achieve EPS through installation of CCS technology would not be viable at all sites, for reasons such as not having enough land available, and these would have to be closed. For plants that do have CCS fitted or retro-fitted there will be a learning curve as CCS has yet to be proven on large-scale systems. In the event that issues of reliability or high maintenance costs emerge, there could be an impact on security of supply.

6. In terms of the impact on climate change, carbon capture would beneficially reduce emissions from the plant. However as with other EPS routes, such as fuel pre-processing or plant redesign, there will be a negative impact on plant efficiency. It will therefore be important to assess sustainability and impact on emissions over the whole life cycle.

What is the likely impact of EPS on domestic energy prices?

7. There is a general expectation that much needed investment in the UK’s energy infrastructure will increase costs, though there is a separate debate to be had about how to apportion the impact of price increases – not least to guard against a regressive outcome for the fuel poor. To the extent that EPS increases the capital cost of plant, increases maintenance or operational demands, or results in more fuel being burnt, it will contribute to increased costs. It could also lead to a further decoupling of energy prices from the raw fuel cost, since the cost of the fuel - whether coal or gas – will be a smaller percentage of the overall power station operating costs.

September 2010