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I shall take Amendments Nos. 11 and 12 together. They would change the test for establishing the grounds of commercial interest on the basis of which information may be excluded from the register of CO2 storage licences. This exclusion would be at the discretion of the Secretary of State. The proposed amendments replace the current test that the disclosure of the relevant information would have to prejudice a person’s commercial interests “to an unreasonable degree” with a new, and possibly less onerous, test that disclosure of information would have to prejudice a person’s commercial interests unduly. At first sight, and maybe even at second sight, this looks like a lawyer’s distinction, but we think that it is worth standing out on this. As I have already mentioned, the provisions of this clause largely replicate those contained in Part 2 of the FEPA, where the unreasonable degree test is used. I remind the Committee that the FEPA governs temporary depositions of materials on or under the sea bed and, while not suitable for regulating the permanent storage of carbon dioxide, it sets a valuable regulatory precedent for the test establishing commercial sensitivity. The test has been applied in the context of FEPA for a number of years and has worked effectively.

Moreover, by lowering the threshold for the commercial sensitivity test, if that is what we would be doing, the proposed amendments may have negative public rights implications. As I said, international, European and national legislation gives the public certain rights of access to information on environmental matters. Lowering the threshold for the test of commercial sensitivity, on the basis of which information may be excluded from the public register, would unjustifiably undermine those rights to some extent. Our view is that in relation to the register of carbon dioxide storage licences, only information that would prejudice the operator’s commercial interests to an unreasonable degree can be afforded protection. We do not agree, on this occasion, with the noble Lord.

Amendment No. 13 relates to the length of time during which information ought to remain excluded. The suggestion is that where information is excluded on the grounds of commercial sensitivity, it ought to remain excluded for 10 years rather than four years. It will be for the Secretary of State to decide what information ought to be excluded on the grounds of commercial sensitivity. The Secretary of State will also have the power to exclude information on the grounds of national security, and there is no time limit after which that exclusion is deemed unnecessary.



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In the case of commercial sensitivity, there is a presumption that information that is excluded will remain excluded for four years only, but that period can be extended at the discretion of the Secretary of State on application by the person whose commercial interests are affected. I refer noble Lords to Clause 29(4) on that.

We do not think that the noble Lord’s amendment, which goes from four years to 10 years, is appropriate. First, 10 years seems too long. The four-year period provided for in the Bill strikes the right balance between, on the one hand, ensuring that companies’ commercial interests are not unreasonably prejudiced while, on the other, protecting the right of the public to access this information. I stress again that the provision replicates the equivalent provision of the FEPA, where, again, we argue that it has worked pretty successfully over the years.

Secondly, if in the future it transpired that information was still sensitive after four years, the Bill has adequate safeguards. Subsection (4), as I have said, gives the Secretary of State power to decide, upon application from the operator, whether the information ought to continue to be excluded. This is an important provision that will enable periodic reassessment of the excluded information and will help to ensure that where there are sound reasons for excluding information, that information will continue to be protected. Our response, which is to be found in the Bill, is a flexible one—even a reasonable one. I hope that provides sufficient reassurance that the Bill contains a number of safeguards that will ensure that commercially sensitive information is appropriately protected, including the ability to extend the period for which it remains off the register.

Regarding companies’ attitudes and responses to consultation, we have not had any opposition from companies to the four-year provision. Is the FEPA a reasonable or good precedent? The noble Lord pressed me on the length of information exclusion because, he pointed out, there are differences between the licences. My response is that both short-term and permanent disposal under the sea are environmentally sensitive in their own way, so this is not a bad precedent; in fact, it is quite a good one. Not only has it worked well in the past but the Bill allows for the flexibility that I think the noble Lord wants to see.

To whom can someone appeal if they disagree about extending protection? We have had a lot of discussions with industry about this whole matter, and as it happens that has not been raised as a concern, although that is not to say that he is wrong to raise it as a concern. Should this prove to be a problem, companies will be able to seek judicial review of the relevant decisions concerning information exclusion. However, we are pretty confident that that will not be necessary. The same arrangements, I repeat, have worked pretty well under the Food and Environment Protection Act 1985, so I hope the noble Lord will, at least to some extent, be reassured by what I have had to say.

Lord De Mauley: I thank the Minister for his detailed response. I will study it carefully. In the mean time, while reserving my right to return to this, for today I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.



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[Amendments Nos. 12 and 13 not moved.]

Clause 29 agreed to.

Clause 30 agreed to.

Clause 31 [Termination of licence: regulations]:

Lord De Mauley moved Amendment No. 14:

The noble Lord said: This amendment concerns the way that storage facilities will be closed and how this process will be inspected. It is a reaffirmation of the role of the inspectors in the closure of facilities and makes plain that it is the operator of the facility who will bear the cost. That point relating to the costs remains unclear in the Bill as it stands, and we hope that the Minister will be able to provide some clarification on the point, as well as the reasons for omitting this from the Bill.

We welcome the confirmation from the Minister in the other place that the liability and responsibility for the store will remain with the licensee. Yet he also said that the licence, and therefore the liability, would be terminated only when there was,

Can the Minister explain the criteria in more detail? It seems that the people making such a judgment will be inspectors of some sort. Will the cost of the final inspection still be borne by the licensee?

Clause 27 gives the Secretary of State the power to make regulations specifying the powers and duties of inspectors. We do not seek to replicate those powers with the amendment or cause an instance of unnecessary duplication in the legislation, but we do think that this is the sort of assurance that ought to appear in the Bill. What assurances can the Minister give regarding the shape of these regulations? Will specific mention be made of inspection of facilities when the licences are being terminated?

Noble Lords will understand our concern on this point. A real danger is posed when these facilities are closed down and we want to be absolutely certain that all efforts are made to ensure the safety of the public and the environment. I beg to move.

Lord Teverson: I welcome the questions put by the noble Lord, Lord De Mauley. I should like some help from the Minister on the meaning of paragraph (b), which states that the licensing authority may by regulations make provision,

I have not had much experience as a legislator, but I have never come across something that gives an organisation the power to impose something on itself. It is quite a strange approach. I would have thought it would say something on the lines of “imposing regulations by the licensing authority in respect of”. It is strange to give an organisation the right to impose obligations on itself. I would be grateful if the Minister could explain how this will work. If obligations are imposed on an organisation, they should come from another organisation, otherwise there is a clear conflict of interest.



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Lord Jenkin of Roding: The noble Lord, Lord Teverson, has put his finger on an important point of drafting. It reminds me of the story about the keebird, which flies around and around in ever-diminishing circles. In the interests of propriety, I shall not go any further than that. He is absolutely right in that you cannot have regulations imposing obligations on yourself. Something has gone wrong in the drafting. The noble Lord has raised an interesting if minor point.

Lord Davies of Oldham: I am grateful to noble Lords for contributing and I shall be even more grateful when I have an answer to the bumblebee or whatever analogy made by the noble Lord, Lord Jenkin. First, I shall address the amendment. As the noble Lord, Lord De Mauley, appreciates, inspectors will perform very important functions in relation to carbon dioxide storage sites, ensuring compliance with the relevant licence conditions and adherence to high standards of environmental protection. I therefore agree with him that the regime set up for inspectors in this chapter deserves our close attention. I shall briefly outline the provisions of Clause 31.

One of the key areas covered by the regulatory framework in the Bill concerns the closure of carbon dioxide storage facilities. The purpose of the framework is to ensure that carbon dioxide is stored permanently in geological formations. We have already discussed some of the existing constraints on this matter. However, operators as commercial entities cannot be responsible for carbon dioxide storage facilities indefinitely due to the geological timescales involved, a factor that I am sure is recognised by all Members of the Committee. We are talking about very long time periods indeed.

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Clause 31 therefore provides the Secretary of State and, in relation to licences granted by them, Scottish Ministers, with the powers to make regulations specifying requirements for the termination of licences and the arrangements for the long-term stewardship of closed carbon dioxide stores.

We expect licences to include provisions requiring the carbon dioxide stores to be monitored for a period of time after closure to ensure the safety and security of the relevant stores. During this time, the responsibility and liability for the store will remain with the licensee for a reasonable time after closure. Only when there is sufficient evidence to confirm that the stores are safe and secure would we expect to consider terminating a licence.

If I understand the amendment correctly, it would include an express provision in this clause allowing inspectors to examine carbon dioxide stores following their closure. I do not believe that the amendment is necessary because there are already powers elsewhere in the Bill that would allow us to deliver the same objective. The noble Lord is concerned about the long-term security of the environment, and rightly so.

First, requirements for inspection of carbon dioxide stores, both during the operational phase, when carbon dioxide is being injected, and during the monitoring phase, when the carbon dioxide store has been closed but the licence has not yet been terminated, could be

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included in the specific licence terms and conditions of any carbon dioxide storage facility. The power for the licensing authority to prescribe such, and other, conditions is already in Clause 20, which governs the terms and conditions of licences.

Secondly, such a provision would duplicate powers in Clause 27, which would give the Secretary of State and Scottish Ministers the power to appoint inspectors and make regulations prescribing their powers and duties. That would allow the regulators to specify the inspectors’ responsibilities in relation to both operational and closed carbon dioxide stores and in relation to any inspections that may need to be carried out prior to the termination of a licence.

The noble Lord, Lord De Mauley, has clearly identified an area of concern. What is the nature of the powers of inspection? How do they relate to when carbon dioxide is being injected, and when the site has been closed but has not been rendered sufficiently safe and secure for the licence to be terminated? What happens after that? I assure the noble Lord that there are powers in the Bill that meet the anxieties reflected in the amendment.

Let me deal with the question about the criteria for closure of a store, which was asked by the noble Lord, Lord De Mauley. We need to consult on those issues, and we intend to do so shortly. The criteria will have to be decided on a case-by-case basis. We do not have any experience in regulating the closure of such stores, for obvious reasons. Therefore, international experience and evidence will have to be relied on, at least in the first cases. However, the guiding principles will be clear, well known and, I hope, acceptable to the Committee; namely the polluter pays principle, the essential protection of the environment and the necessary protection of the interest of the taxpayer regarding these issues.

We must consult on this. Noble Lords have raised anxieties about the issues, and we recognise that we are breaking new ground on them and that they are of profound importance. They relate to other issues regarding closure and safe storage, which we will debate later in the Bill. They are profoundly significant. In asking the noble Lord to withdraw the amendment, I also express gratitude that he has given us the opportunity to clarify that we have addressed the issues that he identified and that we will be consulting in due course on the crucial issue of the criteria.

Lord O'Neill of Clackmannan: Will the Minister clarify the question of payment? It was raised, but he has not really addressed it. He made a passing reference to “the polluter pays”, but am I right that the licensing authority will be a charging authority that will charge for the inspections functions that are carried out as part of the licence process? The question of cost does not really arise because it is part of the licence fee, which reflects it. The cost argument does not really enter into this, except when a licensee breaks the safety regulations and therefore incurs penalty charges.

Lord Davies of Oldham: I am grateful to my noble friend, who, as ever, is knowledgeable about these matters and has identified exactly the concept to which

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we are working. The licensing authority is a charging authority and, as long as the licence obtains, it will have the right to demand the necessary, appropriate and defined payments. That is the significance of the moment when the site is defined as closed and secure and the state takes responsibility for it thereafter. It means that the liabilities of the company are at an end at that point.

Lord Teverson: I do not remember—I may have missed it—getting an answer to my question on an authority’s conflict of interest in laying down regulations about itself.

Lord Davies of Oldham: The noble Lord’s interpretation is not quite right. If he looks again at the clause, he will find that the licensing authority fulfils obligations, some of which it is responsible for enforcing. We are describing the obligations of those who are being licensed and defining what the licensing authority will be obliged to do within that context. I cannot conceive why an external body should dictate that necessary role to the licensing authority.

Lord De Mauley: I thank the Minister for his response to the amendment. I will consider it carefully. Like my noble friend Lord Jenkin, I thank the noble Lord, Lord Teverson, for his interesting question. It will be interesting to see whether a government amendment is forthcoming. I also thank the noble Lord, Lord O’Neill, for asking again about the bearing of cost. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 agreed to.

Lord Redesdale moved Amendment No. 15:

The noble Lord said: I apologise to Members of the Committee because some of them like the sentiment behind the amendment but the wording causes some problems. The purpose of the amendment is to look at the question of the competition for carbon capture and storage. The Government announced that they were going to look closely at this and launch a competition for a technology that would bring about a working model for carbon capture and storage. This was welcomed by those on all sides of the House, and in many debates it was seen as an excellent situation. Indeed, knowing some of the civil servants from the DTI who were transferred to the competition team, I thought that it was excellent.

However, we see a problem. Due to costs—this is a capital-intensive process—the Government are looking at backing one technology. To a degree, that is putting all your eggs in one basket. Indeed, the Government are looking at post-combustion technology rather than pre-combustion technology. Post-combustion technology seems the more logical choice for carbon dioxide, but looking at only that in the competition rules out a

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number of other options, including clean coal. The issue is to what extent we are ruling out valuable technologies that will provide an enormous amount of cost and carbon savings.

These issues cannot be underestimated. At a Royal Society meeting, the figure given for the cost of carbon capture and storage was 40 per cent of the energy coming from the power station. I have been given many figures between 10 and 40 per cent. We cannot be certain to what extent there will be an energy and carbon cost in dealing with carbon until these technologies are tested. However, I hope that the Government will take this on board. We are not saying that all technologies should be assessed regardless of how abstract they are. There are issues with some of the more fanciful ideas about dealing with carbon; somebody put forward the idea that we should load nuclear waste into rockets and send it towards the sun. That is obviously not such a great idea.

Our issue is that the Government have talked about the value of carbon capture and storage as a new technology that many other countries will want to buy into. If we limit ourselves to one technology, which might turn out not to be the most effective over the short-to-medium term, would that not be an unfortunate position?

There were discussions in another place about post-combustion technology being applicable to developing markets such as China and India, which will rely on a raft of coal to meet their energy needs. We are not suggesting anything more than a widening of the Government’s ability to analyse other technologies. The current position is reasonably restrictive. If new technology comes on stream to deal with those issues, that might also fall foul of the Government’s position.

I declare an interest as a shareholder in a new technology looking at a post-combustion means of removing carbon; it will not come on line for quite some time. However, the whole issue is extremely interesting. The technologies we are now looking at might well change in very short periods of time because we are talking about such large programmes.

Finally, the Government deciding to go for one technology has put the stoppers on vast amounts of research and development in other areas. Whole teams have been pulled off looking at certain areas because of the Government’s position, which is unfortunate. We had an early opportunity of taking the lead in wind technology and becoming one of the leading players in its development. We lost that position to the Danes, who have created a massive number of jobs and put a great deal of investment in the country to deal with that technology. As we know that this will become one of the leading technologies in dealing with climate change, it would be very unfortunate if we limit ourselves to one technology and allow other countries to develop a range of other measures. I beg to move.

5.15 pm

Lord O'Neill of Clackmannan: I oppose this amendment, but not because I disagree with the pursuit of carbon capture and storage technologies. If we are going to have a competition in which we have both

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technologies, we are talking about having two competitions with two winners. Arguments for both pre-combustion technology and post-combustion technology will be that no matter how good the “post” is, the “pre” will be just as valid. Governments have to make choices if they are constrained by resources. Some people would argue that this is harkening back to the old backing-winners approach to technology and all the problems that we have had over the years in that area.


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