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Energy Bill

I believe that the carbon capture and storage competition was driven not by any urge to wrap a Union Jack round anything but by what was seen as a global need to develop carbon capture and storage technology in the shortest possible time, primarily on climate change grounds but also on energy security grounds. We have precious little time if we are to keep atmospheric CO2 down to a reasonable level by 2050, whether you choose 450 parts or 500 parts per million. It is often not appreciated outside the industry how long it takes to develop heavy engineering—we are talking about really heavy engineering here—which involves learning by doing. The noble Lord, Lord O'Neill, rightly pointed out that all sorts of people were gearing up to do this. However, that occurred in anticipation of the competition. The competition was pretty heavily trailed with the industry and the sums that were trailed were significantly larger than the £100 million that was finally announced. The implication was that there would be two or three trials. In fact, a government spokesman said at a trade meeting that it might even be more. It was on that basis that a range of industrial partners said that they would give it a go. At present capture technology is simply not economic. It adds significantly to costs. No one knows by how much until someone has done it, but conservative estimates indicate an increase of about 30 per cent in the cost of electricity. People pre-invested large sums—tens of millions of pounds—in a combination of public and commercial spirit in order to kick-start their position in the competition. There was considerable disappointment in the industry when the actual competition was announced, but one understands that we are in financially straitened times and if that is the money that is available, that is the money that is available. Personally I believe that the Government's heart or head was in the right place when they looked at technology that could be retrofitted, particularly in developing countries which as we speak are putting coal-fired power stations at an enormous rate. Frankly, unless we or someone else come up with a technology that can control those emissions, we are in a very bad position to manage climate change. The Government did not get it quite right in specifying post-combustion rather than retrofit. There are three main carbon capture technologies, two of which can be retrofitted. One is more obvious—the post-combustion technology—but the other, the oxyfuel or oxyburn technology, can be done as well. It would have been better if it had been specified as retrofittable rather than simply as post-combustion. But that is water under the bridge. Overall, the industry is delighted with the Bill and the reference made to carbon capture and storage; it is pretty happy with the provisions, and it sees the Bill as an important step forward. I shall make a comment that is irrelevant to this debate but bears on what we were discussing before. There did not seem to be an obvious place to bring it in. I hope that it is a helpful comment. The Government may wish to consider the separate licensing of sites as distinct from the licensing of organisations. I may have missed it in the Bill but that is probably going to be quite important. There are two elements: you have to have a site that meets a range of geological criteria, which makes it a sensible place in which to operate. It could be operated by a range of different operators demonstrating particular skills and competences. The Government may want to think about making that distinction.