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Of course the problem has always been the data protection legislation and the fact that people do not like to think that somebody will knock on their door saying, "You're poor and we're here to help you". That I can totally understand. However, when I raised this in debate on 26 January, I asked why these new regulations were okay so far as data protection was concerned whereas everything that went before was not okay. What was the difference? It is very relevant to Part 2 of this Bill, because here again we are going to have data sharing. Why is that all right under the data protection legislation, while the earlier, more ambitious schemes clearly fell foul?

Clause 9(5) spells out:

"A support scheme may in particular provide for scheme customers to be determined in any of the following ways-

(a) by reference to membership of, or to family or other relationship to a member of, a fuel poverty risk group;

(b) by scheme suppliers;

(c) by, or by reference to evidence provided by, the Secretary of State".

It is that third one where one comes back again to this issue of data sharing.

I have had a couple of letters from the noble Lord, Lord McKenzie of Luton-I will not quote them at this hour of the night-who took those regulations through Grand Committee. He has made the point that, if you are having an automatic benefit such as the rebate provided for under this Bill, then you can perfectly safely exchange the information, or share the data. If you are merely asking people whether they want something-whether they want their house fitted with roof insulation, for example-then you cannot. I totally fail to understand why that makes a difference.

The Minister also said that the Information Commissioner was broadly satisfied. I am not sure what that means. I asked to see the correspondence; I should have put in a Freedom of Information request,

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but I did not. Why? What change has he made? How can it possibly be right to share data freely with energy supplying companies for the purposes of the rebates under this Bill, when it clearly was not right to share data for the benefit of the CERT scheme under the previous legislation? I hope that the Minister will be able to answer that question.

Finally, when one turns to Part 3 of the Bill, with the amendments on the duties of Ofgem, my initial reaction was that both major parties are now committed to substantial changes in the role and remit of Ofgem. We may hear something about this in the Budget tomorrow-I do not know. We certainly have the statement in the Timesby the Secretary of State for Energy and Climate Change, spelling out very clearly that it needed to be substantially changed. As our policy statement says, the Conservative Party agrees with that. We are arguing for a substantial change there. Therefore, my first reaction was to say, "Do we really want to go fiddling around with these details now, when we are going to have legislation in any event, whoever becomes the Government, which is going to make major changes to the remit of Ofgem?"

However, having studied the details of the Bill and talked about it, there are things in Part 3 which do seem sensible. It is right to give Ofgem these new powers, even if they may shortly be overtaken by others. In particular, I would mention the new power to modify the market power licence conditions spelled out in Clauses 18 to 23 and, perhaps even more importantly, the power to adjust charges to help disadvantaged groups of customers. It is quite complicated; explanations can be found on pages 27 to 28 of the Explanatory Memorandum. I certainly will not take up the time of the House reading all that out.

We are not going to have a Committee stage on this Bill other than in the wash-up. That seems to be inevitable, which is why I said to the Minister earlier today that it was going to be a pretty funny Second Reading. I have some amendments to Part 3 that I would have liked to have moved; whether we shall have a chance, I do not know. On balance, I think that Part 3 should go through to the wash-up and that the Bill should eventually become law, albeit in a very short timescale. It has been properly debated in the other place-there is no question about that. They had a good go at it, and if we do not have a go at it, I think there will be opportunities in future energy legislation very soon after the election. I have asked two straightforward questions. First, is it right that we are not going to see a winner to the CCS competitions until next year? Secondly, why is it that the data protection is okay for some purposes and not for others? I simply do not understand it.

7.27 pm

Lord Oxburgh: My Lords, I, too, welcome the Bill. It is a modest Bill. I guess that I differ from a number of others who have spoken only in the greater degree of my disappointment over what it does not do. Before I get on to carbon capture and storage, which I shall be talking about largely, I to ask the Minister-arising from his introductory remarks-how it is established that there is value for money for the sums that the supply companies are obliged to spend on alleviating

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fuel poverty. It is easy for them to spend the money, but is the money being spent sensibly? Do the Government know?

Turning to carbon capture and storage, I must rather fully declare an interest. I am honorary president of the Carbon Capture and Storage Association, a position which I took up when the association was formed several years ago. It is a totally subscription-based organisation and not one-as alleged in today's Times-that could bring in billions in money. The reason I became involved in this association was that carbon capture and storage seemed to me to be a vital bridging technology for as long as we continue to burn fossil fuels, during a transition to a low-carbon energy economy. That remains my view. It is something that we have to have.

I take it that when one is talking about government policy on carbon capture and storage, one can now discuss the document which the Secretary of State launched last week, Clean Coal, An Industrial Strategy for the Development of Carbon Capture and Storage across the UK. I am afraid that I find this a particularly disappointing document. It is not that good things have not been done, but that there is a real lack, as far as I can see, of both a sense of urgency and a sense of commitment. Speaking of urgency, I refer to paragraph 1.9 in this document, which states that as part of the Government's plans for a long-term transition to clean coal:

"A rolling review process, which is planned to report by 2018, will consider the appropriate regulatory and financial framework to further drive the move to clean coal".

It says 2018, my Lords.

There is no reference in the document to how one will put in place the infrastructure for carbon capture and storage. It is universally recognised within the industry that this is likely to be the bottleneck. The demonstrators are largely-not exclusively, but largely-concerned with the demonstration of capture technology. The whole infrastructure for transferring CO2 from where it is generated, in power stations round the country, really has to be subject to planning now, simply because it will involve pipelines which will involve permitting. We know that even with the best will in the world, that is a very long process. Unless we start it now, we have no chance of implementing carbon capture and storage in a timely way. I need not remind the Department of Energy and Climate Change of the urgency of getting emissions under control.

What about commitment? Page 16 of the document states:

"It is generally agreed that, if proven, CCS will be needed to make a substantial contribution ... to global abatement of CO2".

If proven? I should be grateful if the Minister could produce one chemical engineer who thinks that there is any technical difficulty in achieving carbon capture and storage.

There is uncertainty over the cost. However, the same document includes a very sensible and realistic table of the costs of carbon capture and storage. It represents the upper costs perfectly reasonably, and they will probably be less. In a number of places we find carbon capture recommended if it is "affordable". What is affordable? If it is not affordable, what is plan B? Does the Minister intend that we repeal the

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Climate Change Act or that the country should stop burning gas and coal for the next 30 to 40 years? That is a pretty tough choice either way. At the moment, this is unresolved in the document which the Government have produced. It is the demonstrable lack of commitment that dogs UK industry. The Government cannot expect UK industry to take carbon capture and storage seriously and commit to it before the Government do the same.

I turn briefly to other matters. Whichever hue of Government we have after the election, a serious review of energy will be urgent. The main reason is that, globally, the fossil fuel situation in the past 18 months has changed profoundly, due to a recognition that shale gas is a viable economic proposition. I confess that for quite a long time I was sceptical about shale gas, but now I think that it has been sufficiently demonstrated in the United States that there can be little doubt. It is relatively poorly understood or explored but clearly it will be important. The US is now cancelling orders for imported liquefied natural gas from the Middle East. We see that Canada is now preparing to export liquefied natural gas to China. The natural gas price has become decoupled from the oil price to which it has been tied for so long. Indeed, we see relatively lower gas prices, much more security of gas supply and the UK in a relatively good position. We were on the end of the pipelines coming from eastern Europe, but this country is pretty well served with LNG terminals. A lot of European LNG will come in and it will be exported by our pipelines to Europe. This time, we are on the right end of the pipeline. Clearly, that has profound implications for energy policy.

Another point is that the Government should be aware that there is widespread concern in the energy generating community that the Government have not fully grasped the operational and business implications of wind energy targets, which, if implemented, will take wind generation to more than half of the maximum winter demand. It is not that that cannot be done, but it is not necessarily a very sensible way of proceeding. I declare an interest as the chairman of a wind energy company. However, I think that this is probably excessive. An incoming Government must pay much more attention to diversifying the renewables portfolio, as a number of noble Lords have pointed out. Biogas and biomass are becoming more important. Marine tidal stream has just completed a successful demonstration in Northern Ireland. The important thing about these renewables is that they are out of phase with wind. You can get away with a much larger fraction of renewables in your energy portfolio if you have a spread across the field.

The Bill is fine as far as it goes, and I hope that it passes smoothly. I am sorry that we are unlikely to have the opportunity to debate it in much more depth. It disappoints me on its commitment, to CCS. A new Government will have to tackle that if they wish to move ahead at the industrial level. Undoubtedly, we will need a new energy policy.

7.38 pm

Lord Woolmer of Leeds: My Lords, it is always a pleasure to follow the noble Lord, Lord Oxburgh, from whom I learn something new every time he speaks. I am most grateful to him. I, too, want to talk

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overwhelmingly about carbon capture and storage, initially in the context of the region where I live-Yorkshire-but I shall widen the discussion to the issues raised by the noble Lord, Lord Oxburgh, and others.

The Government seem to have two reasons for their almost experiments with carbon capture and storage. The first is the declared desire for coal to contribute significantly to the mix of the energy security of this country. The second is the recognition that coal-fired generation will be absolutely vast in India, China and other countries for years to come. New technologies have export potential. The IEA in its World Energy Outlook 2008 quoted figures of coal production rising from less than 4,500 million tonnes of coal equivalent to something over 7,000 million tonnes of coal equivalent by 2030. I can well see that the Government may have in mind that that is a very attractive market, even if they do not have their heart and soul in what will happen with coal-fired generation in this country. I shall turn to that in a moment.

In the Yorkshire region, there is a cluster of carbon dioxide emitters. They do not comprise just coal, although mention has been made of the three big coal-fired generators, Ferrybridge, Eggborough and Drax. Incidentally, I think that they are cooling towers rather than heating towers; they might blow up if they were heating towers. In total, the emitters in Yorkshire emit around 60 million tonnes of carbon dioxide a year. That is equivalent to about half the carbon dioxide emissions generated by all UK households, so a very large amount of carbon dioxide emissions are generated in the Yorkshire and Humber region. However, only half of that comes from coal-fired power stations. Fifteen million tonnes come from gas-fired stations; 2.5 million tonnes come from oil-fired stations; between 5 million and 7 million tonnes come from the Corus steelworks at Scunthorpe, depending on its operating capacity; more than 1 million tonnes come from a glassworks; and 1 million tonnes come from a cement works. I say all this because, if carbon capture and storage is to mean something in the long run, it must deal with more than just coal. It is not just a question of coal in the United Kingdom. In the Yorkshire and Humber region, a large amount of carbon dioxide is being pumped into the system from around 12 major sources. Off the coast of Humber, in the southern part of the North Sea gas fields, there is a whole range of potential storage sites.

The Yorkshire region demonstrates exactly that if you put together a carbon capture pipeline transport and storage system, it makes sense to do it in a place that will have a strategic long-term likelihood of success. One thing that bothers me somewhat about the current situation is that this experiment with four carbon capture schemes does not seem to fit into a strategy. Trials may take place in different parts of the country but, in a large region with a substantial number of emitters, the construction of a pipeline system and a storage network that serves all of them would make a great deal of sense. Although the Bill can encompass gas-fired power stations, that is not the Government's intention, as the Minister said. It would be helpful if the Minister could reassure me on my next point. I wonder whether emissions from cement, gas and other

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things come under BIS or DECC. Are DECC and BIS talking about a strategy that makes sense across the board? My instinct is that DECC is concerned with climate change and has certain ideas about energy generation, but that other types of emissions may fall under other parts of government.

Looking at the trial scheme in the long term, if you develop a pipeline system that goes out to sea and into a storage system, it will be extremely expensive for a single source of carbon emission-a coal-fired power station-to meet the whole cost of a pipeline going out to the coast and into that storage system. The capacity of such a system would be very small. If, on the other hand, you intended to have a series of these linked together over a period, you would put in a completely different size of pipeline. The diameter of a pipeline to serve a single emitter would be about 12 inches. If you put in a pipeline that, over time, could link in with a series of emitters, it would be 48 inches. Is this issue being considered? If you are to put in a pipeline that can serve all the coal-fired power stations in the Yorkshire and Humber region, it is no good putting in a 12-inch pipeline because, over time, you will have to put in another 12-inch pipeline, which would clearly be silly. Has the Minister given any thought to this?

Lord Jenkin of Roding: I am following the noble Lord with great interest because this is clearly an important subject. People have argued that there needs to be a CO2 grid and that one of the tasks of government is to ensure that as carbon capture and storage is developed-not only for coal but for other emitters, as he said-there is a proper CO2 grid to collect it and pipe it to the place where it is to be stored. Would he support that?

Lord Woolmer of Leeds: I entirely agree with the noble Lord. I would not suggest one grid for the whole of the United Kingdom, but certainly in the Yorkshire region, with its 12 major sources of emissions-as I have explained-it would be logical and extremely sensible to have a grid. What is the intention of the Government in this regard? If they really believe in this and intend it to be a strategic investment for the UK-not an export market for technology to India and China-I entirely agree with the noble Lord, Lord Jenkin, that that is the way to go forward and I would be extremely interested in it. The Government should develop a grid for the Yorkshire and Humber region. That would make an awful lot of sense.

My next two points concern strategy. A large amount of British coal-fired electricity generation will cease to operate well before 2020, given the large combustion plant directive. Other EU legislation will mean that other plants will be out of commission by the mid-2020s. Some commentators think that there will be no coal-fired power generation left in the UK by the mid-2020s. If these commercial trials are to lead to coal-fired generation in the UK thereafter, there may be none left on the timescale to which we are working. The coal-fired power stations that face potential closure will be considering the best use of their site. If they feel that there is uncertainty about carbon capture and storage and the Government's commitment, they will build a gas-fired power station on the site of the coal-fired

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power station. Given the current regulation and policy, They cannot afford to let a coal-fired station close and then wait another 10 years to see whether the Government have carbon capture and storage in place. That is not what will happen at all. The Minister is very much on top of his brief, but does he agree that there is a real possibility that we may be applying commercial trials to a coal-fired generation scheme that may not exist by the 2020s? Has he considered that?

As regards the financial and other elements of investment decisions, how can the coal-fired generation industry be confident that the long-term financial and regulatory frameworks will be in place that will be necessary to ensure take-up of carbon capture and storage, even if these demonstration projects prove technically feasible? I have seen one estimate based on the assumption of an emissions trading carbon price in Europe of €35. Even that would not be enough to make carbon capture and storage commercially viable. The current price is €12 to €13. If this is based on the European Union Emissions Trading Scheme price, with some modest subsidy, how does that square up to the viability of this operation? On the other hand, are the Government considering whether to oblige electricity suppliers to buy a certain capacity from carbon capture and storage generators? In other words, just as there is a renewables obligation, is it the Government's thinking that there will be a carbon capture and storage generation obligation? That would mean that, whatever the price of carbon, there would be an absolute obligation to buy some.

These are important matters. When I talk to coal-fired generators, I am told that the carbon issue that they are thinking about is timing. They think that things are going far too slowly and that these trials will not have borne enough results to convince the Government of the day to influence investment decisions on what they will do when they close the plant down. They are so unclear about the Government's intentions in- relation to the price of carbon and commitments and obligations to buy the output from these plants-that there is serious doubt about whether these commercial trials will lead to investment by the time we get to the 2020s and 2030s. I look forward with great interest to what the Minister has to say on these matters.

7.51 pm

Lord Reay: My Lords, the main purpose of this Bill is to introduce a subsidy mechanism to enable the trial of carbon capture and storage to proceed. The mechanism is to be a levy on electricity suppliers, which they, in turn, are expected to recover from electricity users. The amount to be raised, we are told by Ministers, will be £9.5 billion over 10 years. At the same time, to offset the effect of the levy for those in fuel poverty, the industry will be obliged to make available at least £300 million per annum by 2013-14 to support the most vulnerable consumers-twice the maximum amount that companies will have spent per annum hitherto under a voluntary agreement negotiated with the Government, which will now be superseded. Electricity bills for the remainder of consumers will then, of course, rise further. The levy raised will be spent by the administrator, Ofgem, on promoting four trials, which

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it is hoped will be completed by 2020 or thereabouts. Then we will know, we hope, whether the technology passes the test of being technically and economically viable on the scale required for mass deployment. By "economically viable" is presumably meant whether the Government decide that they, or the electricity consumer, can afford whatever additional subsidies will be judged necessary to incentivise the rollout of the technology.

Then there is the whole paraphernalia of the transport and storage of liquefied CO2 through a vast network of pipelines to some cavernous spaces under the North Sea, as the noble Lord, Lord Oxburgh, described. That is not cheap and is achievable only with further subsidy, no doubt, or by making any alternative even more expensive by means of a carbon tax, for example. I do not see us being carried very far along the road of installed CCS by means of the £9.5 billion alone.

The moment may come when we have to decide to accept that there is a limit to what we can do to reduce further our carbon emissions and, for the sake of our energy security, accept some coal together with its emissions. This might be plan B for the noble Lord, Lord Oxburgh. After all, it is what we do today in the case of gas, whose emissions are far from zero and whose deployment is proceeding apace.

What happens if the CCS trials do not produce a satisfactory result? Do we really expect that India and China will abandon their use of the abundant cheap coal to which they have access just because we have discovered that clean coal is too expensive? Do we expect that they will have held back while we conducted the trials? The CCS levy is only the latest, and will not be the last, in a series of costs that the Government are imposing on the British electricity consumer in the cause of persuading the rest of the world to reduce carbon emissions because of their supposed effect on global temperatures.

As the noble Lord, Lord Jenkin of Roding, listed in Grand Committee on 11 March 2010, before CCS we had the EU Emissions Trading Scheme, the renewables obligation and the carbon emissions reduction scheme, while still to come are feed-in tariffs, the renewable heat incentive and smart meters, not to mention electric cars, although in that case it may be the taxpayer who is going to be called on in the first instance. How much the consumer will be willing to take is a moot point, especially as he is now learning that for the past 20 years climate science has been corrupted by politics to deliver the warnings that justify all this expense.

I was pleased, therefore, when my honourable friend the shadow Energy Minister declared, during the passage of this Bill in another place, that he wanted energy bills received by customers to list the amounts attributable to environmental legislation. I am even more pleased that this has now been carried over into my party's latest energy consultation paper, which was published last week, as was discussed. Towards the end of that document is this passage:

"The first step ... is to be absolutely transparent about the costs to consumers of existing and future subsidies, so that the public has a clear view of the extra burdens mandated by policymakers. Under a Conservative Government all consumer-paid subsidies will be disclosed on energy bills so that bill payers can be informed about the level of contribution they are making".


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