Examination of Witnesses (Questions 400
- 411)
TUESDAY 1 JULY 2008
Mr Neil Hirst
Q400 Lord Lawson of Blaby:
Obviously we would not be into this renewables game if it were
not for the concern about carbon dioxide emissions on any scale
so there is obviously a clear comparison between renewables on
the one hand and carbon capture and storage on the other as a
means of eliminating these emissions. You mentioned indeed that
that had a part in your scenario. May I ask you therefore one
or two questions about that. When do you think, if ever, it will
be commercially available? When it is, how much do you think it
will add to the cost of power generation by conventional carbon
means? In other words, how much will the extra cost of the capture
and sequestration be and how much will the total cost of producing
electricity that way compare, in your view, with renewables, in
particular wind power because that is the British Government's
favourite renewable source?
Mr Hirst: We do think that carbon capture
and storage is an enormously important strategy for managing global
CO2 emissions because coal is such an accessible and relatively
low-cost fuel for the most dynamic of the global economies, particularly
Indo-China. Also I think we should take into account the fact
that to some extent in the UK and US situations there is a need
over the next decade, too, to replace very large amounts of generating
capacity, so there is a potential for a lot of coal capacity to
be brought in around the world in the next couple of decades,
and if that either does not have carbon capital or it cannot have
carbon capture and storage—I am having to choose my words
a bit carefully here—it really makes it extraordinarily
difficult to achieve the sort of overall cuts in account CO2 emissions
which government leaders are calling for. That is why we have
called, as part of the advice we are giving to the G8, for a commitment
to be made by 2010 to at least 20 full-scale coal plants with
CCS. That is a commitment that was actually endorsed by G8 leaders
when they met in Aomori in Japan a couple of weeks ago. That is
quite tough and I should perhaps have said earlier, we are not
saying these are easy options; they are tough options. That is
quite tough but we think it is necessary and that could create
a situation whereby 2020 CCS is available internationally as a
fully commercial option. I do not mean by that of course that
it is competitive with coal without CCS—it will never be
competitive with coal without CCS—but it is a cost which
would be regarded by utilities as commercially proven and of which
there was some confidence as to its costs and as to its reliability.
We think that—and I could not put an exact date on this—in
this process when this technology is fully developed and commercialised
the costs could come down to around three to four US cents per
kilowatt hour. Paying that to install CCS would approximately
double the cost of generating electricity from a fairly efficient
coal plant. You have to realise that a large part of the cost
of coal is transport and therefore the cost of a coal plant varies
enormously on where it is located and what its source of coal
is. I am sorry, I have answered most of your questions.
Q401 Lord Lawson of Blaby:
That is very helpful. What you are saying is clearly there is
an element of wishful thinking here. That does not mean to say
that your wishes may not come true, who knows, but in a sense,
as I understand it, you are driven by the fact that you have got
to believe that this is going to come good because realistically
you cannot see any other way of meeting the targets which are
of virtual elimination of carbon dioxide emissions which have
been set or talked about?
Mr Hirst: When I was sitting behind I
heard described by the oil companies, very accurately I thought,
the fact there is nothing missing in the sense of there is bit
of technology that we do not know works, but nobody has put it
together yet, and so I agree with you, it would certainly absolutely
rely on this technology which as a complete whole as an integrated
plant, demonstrated to the public, with confidence with the costs,
does not exist at this moment. We think it is very likely that
it can be developed in this way but we certainly do not think
it is certain and therefore in this publication we do look at
a scenario. We say what if for any reason carbon capture and storage
simply is not available, and I am afraid I forget the exact figures
but what you find is either you have a very significant further
increase in costs or you find that you cannot meet the target
of a 50 per reduction so, yes, life is significantly more difficult
without CCS.
Q402 Lord Lawson of Blaby:
On your scenario, which I rather unkindly called a wishful thinking
scenario, as I understand from what you were saying to us earlier
the cost of electricity would be roughly double?
Mr Hirst: The wholesale cost of electricity
from a coal plant, yes, could be roughly doubled.
Q403 Lord Lawson of Blaby:
How would it then compare, in your judgment, with the cost of
electricity from renewables, particularly from wind power?
Mr Hirst: That is a fantastically difficult
question because of all the change. You have got to make assumptions
about how successful we will continue to be in bringing down the
costs of wind power. Our broad conclusion, which is embodied in
this costs minimisation model, is that they will both be competitive
in different circumstances. With wind different parts of the world
have much better quality wind and more wind or more reliable wind.
Other parts of the world have coal which, as I have just explained,
hinges very much on whether you can cite a power station close
to a low-cost source of coal, so they will both be competitive.
It is our best estimate in the right circumstances.
Q404 Lord Lawson of Blaby:
And for the UK?
Mr Hirst: The same applies for the UK.
It is difficult to say but one would definitely be more competitive
than the other.
Q405 Chairman:
Could I turn now to nuclear and just ask you what you expect to
happen to the cost of nuclear power over the next two decades?
How large are the world's supplies of uranium? If we turn to the
question of plant decommissioning and waste deposal that so many
people are concerned about, how many countries appear to have
found a solution to that problem?
Mr Hirst: We currently have the levelised
costs of nuclear power in the range of four to 7.5 US cents per
kilowatt hour, so that is significantly more than a relatively
low-cost coal plant without CCS but it is in the same broad region
as we think could be attained in the future by a coal plant with
CCS. I have not got a figure to what we think those figures are.
There are a number of factors which could bring those costs down.
One of course is if there are very large, as we see from the French
experience, runs of construction of very similarly designed plant
that could bring the costs down. There is the prospect of more
advanced plant generation for plant which does have economic benefits
and again could reduce the cost, so we do see some potential for
reduction in those costs. Nuclear waste: there are different elements
to this. I think that there are a number of examples where the
decommissioning of plant has been successfully conducted back
to green field levels. There are a number of examples of where
countries have found solutions for the disposal of low-level nuclear
waste. If you are talking about high-level nuclear waste, the
situation there is quite a number of countries have well-defined
strategies for the disposal of high-level nuclear waste. In almost
all countries the issues now are around essentially public acceptability
for strategies which will find solutions which will last for a
very, very long time but I do not believe that there is any country
that has of this moment actually disposed of significant amounts
of high-level waste in long-term industries.
Q406 Lord Lawson of Blaby:
You have a similar problem, do you not, with carbon sequestration?
Admittedly, there are not the same sort of fears about the radio-activity
but you do have a real problem because nobody has sequestered
huge quantities of carbon dioxide until now and if that went wrong
that could be quite unpleasant too, could it not?
Mr Hirst: Probably comparisons are odious
in this particular regard. You are right that, as I have mentioned
earlier, one of the issues with carbon capture and storage is
winning public acceptance. Are the public comfortable with sequestering
what would be very large volumes of carbon dioxide?
Q407 Lord Lawson of Blaby:
Huge, yes.
Mr Hirst: Of course there is a certain
amount of experience with this because oil companies have for
quite a long time pumped rather large volumes of CO2 underground
for tertiary recovery of oil reserves and there are a number of
quite major tests going along around the world. There is one in
Canada, there is one offshore in Norway, where people are, and
have been for several years now, pumping significant volumes of
CO2 into natural reservoirs and there are already quite a few
results from advanced seismic examination which tend to show that
CO2 does indeed stay in situ as far as people can judge. How should
I characterise that? It appears a perfectly viable option. We
do not believe that there are really evident hazards that people
should be concerned about, but that does not alter the fact that
actually having approval to do this, having in place the details
of a monitoring and reporting regimes that will be required is
a hurdle which this technology has still to get over.
Q408 Lord Moonie:
Looking at the use of renewable energy for heat, which countries
make the greatest use of this? What factors explain this, and
are there any lessons for the UK there?
Mr Hirst: I think one very interesting
example is China which is by far the leading country in thermal
and solar heating for domestic water. China has developed a huge
industry, a low-cost technology and many millions of this plant
have been installed. Other examples such as Germany and Sweden
certainly are making much more use of these technologies than
we are. You also see quite a lot of use in countries with large
forestry industries with forestry waste products being used for
heat generation where it cannot be used for combined heat and
power, so I would say there are a lot of good examples there that
the UK could probably follow.
Q409 Lord Lawson of Blaby:
May I ask a question not perhaps for you to answer now but this
paper of yours Energy Technology Perspectives is very interesting
indeed but it is a massive paper. Do you have a convenient executive
summary you could send to us?
Mr Hirst: Yes.
Q410 Lord Lawson of Blaby:
I think it would be very useful for us to have that.
Mr Hirst: I may have enough for you and
your colleagues.
Q411 Chairman:
For the numbers who are here at the moment! It would be helpful
to have other copies for the rest of the Committee.
Mr Hirst: I am not quite a travelling
salesman but I have some of these with me.
Lord Lawson of Blaby: We are not asking
to buy them!
Chairman: If you could give us enough
copies for the rest of the Committee and also the note that we
discuss earlier. Also if there are any points that we have not
been able to cover that you particularly want to put to us, for
example in relation to biofuels and transport, please let us have
a note on that too, perhaps from some of the preparatory work
that you have done. I apologise for the small number of people
here. It is for a whole variety of reasons this afternoon that
we are down to quite a small number but of course the evidence
will go to all of us. I am very grateful to you for coming; thank
you very much.
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