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While we are not yet convinced that the amendment is necessary, we support the principle behind it. It cannot be denied that dithering cost the United Kingdom the installation of the carbon capture and storage facility that BP proposed for Peterhead. We sincerely hope that more delay will not cost the United Kingdom the benefit of future projects, just as we hope that the Government will not engage in picking winners that might suppress better technologies from emerging.

Lord Davies of Oldham: I am grateful to all Members of the Committee who have spoken on this humble amendment, which has covered most energy policy—certainly that on carbon capture and storage. I am grateful for the range of contributions to the debate, not least that of my noble friend Lord O’Neill, who responded accurately to the noble Lord, Lord Redesdale, using phrases that would perhaps not be entirely appropriate from the more dispassionate position of the government Front Bench. Nevertheless, he gave a real riposte to some of the points of the noble Lord, Lord Redesdale.

At that time, however, we were still largely concerned with the amendment; I confess that we have subsequently been concerned with energy policy. I will do my best to answer the points of Members of the Committee, but they will forgive me for being ill equipped to deal with some of the more general ones. Initially, however, I must at least put the amendment into some kind of context, and give the noble Lord, Lord Redesdale his due. He has put forward an amendment which deserves a government response.

I am conscious that the ground has been prepared for detailed discussions, both in the other place and during the House of Lords debate on Second Reading, on the broad issues of carbon capture and storage, particularly the competition for the demonstration project. However, I emphasise again what the Bill is meant to achieve. The Government’s commitment to all carbon capture technologies is clear. The key reason

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for the Government making a technology choice for our competition for a commercial-scale demonstration project is obvious. The project already involves the Government committing hundreds of millions of pounds, and it is inconceivable for us to put the same level of investment into the range of potential technologies available. The noble Lord, Lord Jenkin, is absolutely right. As always, he identified with great accuracy aspects of the costs of the choice that is made. There will be the costs for those who are disappointed. We know immediately that one British company was severely disappointed at the origins of this, having taken a lead on this work. In its view, the way in which the competition was set up was not entirely appropriate. My noble friend Lord O’Neill identified why the Government are bound to make some choices, which is the nature of the exercise.

I want to emphasise that the Bill is an enabling framework which will allow the safe storage of carbon dioxide offshore, paving the way for wider deployment of carbon capture technologies. I think that the noble Lord, Lord Jenkin, expressed it in terms of the grid. I do not have anything positive to say in response to that, except that in the not too distant future, clearly, there is no point in getting the industry fitted with the necessary technology to capture the carbon if we cannot get it to safe storage. That implies the nature of the grid.

The Government are not out to regulate which technologies may be deployed in various ways or to regulate the activity of carbon capture at all. That is not what this Bill is about. It simply provides a regime to regulate the activity of the storage of carbon dioxide offshore. Although I respect entirely the opportunity which the noble Lord, Lord Redesdale, has brought forward to advocate other aspects of carbon capture, the provisions in the Bill are technology neutral. It does not specify what technology should be employed.

There is a unity among all sides of the Committee that the potential contribution that the technologies can make to tackling global climate change is very significant. The Stern review estimates that carbon capture and storage could contribute up to 28 per cent of the carbon dioxide reductions needed by 2050, if the aim of restricting the temperature increase to 2 degrees is to be achieved. We must remain focused on carbon capture and storage as a global solution to climate change.

My noble friend Lord O’Neill identified that other countries are pursuing different strategies. Certainly, it will be appreciated that in Norway and the United States there are different approaches. This Government support a range of carbon capture technologies through a variety of means. In April 2008, the Environmental Transformation Fund was set up to encourage and fund industry-led demonstration of carbon abatement technology projects, which includes components of CCS. To date, some £2.2 million has been granted as funding to one project. We have put £8.8 million into various research projects that are supported by the research councils and the Technology Strategy Board. My noble friend Lord Woolmer introduced the point that it is crucial that the Emissions Trading Scheme should take account of carbon capture and storage

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issues, which we are pressing for. We have some optimistic responses on that. I am not sure that I am able to quite commit the Government to a date of achievement on that or any matters relating to negotiations in Europe, but I emphasise that the directive on this was introduced on 23 January 2008 and we would hope that it will be negotiated by the end of the year. But my noble friend will recognise that that is bound to be an aspiration and not a government policy, as EU directives generally require a certain amount of negotiation.

The only area on which the Government have made a deliberate choice is in relation to the competition for a demonstration project. Of course, there are powerful reasons for having done so, and I am sure that noble Lords will have heard through debate in this Committee about the nature of those reasons. We have also seen the formation of the Energy Technologies Institute, which also considers CCS as one of its possible future technology themes. That has a budget of £1 billion and brings together government and some of the world’s biggest companies with a view to accelerating the development of low-carbon energy technologies towards commercial deployment.

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Not all the eggs are in one basket. That is the point that I seek to emphasise. We also take on board the point that others may make breakthroughs in other countries from which we derive development. What is absolutely clear is that without this technological breakthrough the capacity to reach 2050 targets is greatly limited.

The noble Lord, Lord Redesdale, pressed me very hard, so I want to emphasise that we did look to see whether it was possible to have a competition inviting more than one technology. Of course, the issue came down to the question of cost. I understand what the noble Lord says on the pre-combustion techniques; there is potential within the competition for wider technological breakthroughs than the narrow one that he apostrophised. I am not able to avoid the obvious fact, when he complains that that choice was made, that there were costs involved. While companies were planning pre-combustion projects—the noble Lord, Lord Jenkin, identified exactly that fact—a choice had to be made by the Government, and it was so done.

I assure the noble Lord, Lord Jenkin, that the issue does not stop there, however. It is important that a range of initiatives are pursued; the Government will give what support they can in these terms. The only way in which the amendment might be relevant to the Bill is if the Bill circumscribed, checked and controlled the potential for other opportunities. That is not the Bill’s intention and it is not what the Bill does. That is why I congratulate the noble Lord, Lord Redesdale, on having taken advantage of this opportunity to present the case as he has for pre-combustion technology, but the Bill is not an inhibiting factor in those terms. That is why his amendment is not necessary and I hope that in due course he will withdraw it.

I was grateful to the noble Lord, Lord Oxburgh, for putting all these issues into an erudite context. He is right that the issue of choice involves costs and represents the cost bond by the Government, but he is right, too,

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when he says that on the whole the industry is supportive of this measure. It is aware that despite the fact that the competition involved a choice by the Government, the Bill itself is open-minded about the question of development of technologies. That is why it has the breadth that it has and why I would want to resist today any suggestion that the Bill provides a constraint on fertile developments, which must be grasped if we are going to make the necessary progress.

I am not sure whether I should be speaking on general energy policy, ill qualified as I am to do so; but I have been forced to do so by the nature of the questions addressed today. To go back to the amendment, it has been the trigger for a very significant debate and has raised very significant questions, which we all need to address. I hope that the noble Lord will recognise that it would not aid the Bill’s openness or its technology-neutral quality for the amendment to be accepted. I hope that therefore he will withdraw it.

Lord Redesdale: The debate has been rather wider than I expected and has riled some noble Lords. The noble Lord, Lord O’Neill, said that the amendment should be thrown out. Some of his comments were extremely interesting, particularly as regards buying in technology from the States. However, that would add to the fuel costs for any generator in this country if the technology was not developed here. We could develop the technology here. That was one of the reasons for the competition. I am not against the role the Government have played in backing carbon capture and storage; I welcome it. I never suggested that the Bill’s provisions setting out a means for disposing of carbon dioxide in the North Sea were not very worthy. I did not question that at all, although the Minister gave the impression that I had.

The Minister mentioned Stern. The real issue here is that carbon capture and storage is seen as one of our main planks in dealing with carbon dioxide. I take him back about four or five years to a debate in which he said that carbon dioxide did not have a cost, which

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was the case at the time. However, it has a significant cost now. I was surprised when the tradable value of carbon dioxide was mentioned as I thought that was slightly wide of our discussion. However, this is becoming one of the main issues as regards energy generation. Later amendments deal with carbon dioxide being one of the main costs of energy generation.

We do not object to the Government holding a competition. We realise that there were very many reasons why they took the route they did down one avenue. I take the point made by the noble Lord, Lord Oxburgh, that the industry was slightly disappointed with the amount of money available. In one respect that is very unfortunate because this will take an enormous amount of pump priming. I say to the noble Lord, Lord O’Neill, that to develop some of these technologies requires government money; it does not come from industry alone. The risk factors are enormous. When we are talking about companies spending, and wasting, tens of millions of pounds—as has happened, especially with BP—that is a signal which the market takes on board. If schemes are abandoned, it will be much more difficult to get others started in future. The Minister made the fair point that the market is open for any company to come forward and produce this technology. However, given the problems that have arisen in the past couple of years, you would have to be a very brave chief executive indeed to take that route, especially in the current credit market. However, I take the Minister’s points on board. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 32 and 33 agreed to.

Lord Bach: It may be a convenient moment for the Committee to adjourn until next Thursday at 2 pm.

The Deputy Chairman of Committees (Lord Brougham and Vaux): The Committee stands adjourned until next Thursday at 2 pm.


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