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Energy Bill

I hesitate to add anything after the words of the noble Lord, Lord Oxburgh, on this. I understand the points made by the noble Lord, Lord O'Neill. I read all the oral evidence that was given to the Committee in another place before it had its formal sittings and I found logical the arguments of Mr Wicks—the Minister who gave evidence as well as being a member of the Committee; it was a slightly strange process—that this technology was the one most likely to be sold. What has not been recognised is the penalty for having gone down that road. I was given a briefing the other day by the oil company ConocoPhillips, which had the very large potential of a combined heat and power plant at Immingham, which would have involved pre-combustion technology. The company had taken that a considerable way, until the competition was announced and it was said that it would be post-combustion. I was told that the company has now moved its team of experts to California and will do it there instead. I shall not weary the Committee with all the figures that have been given, but it appeared to me, as a result of what the company said, that what it could have achieved in carbon reduction through combined heat and power using a pre-combustion technique was very substantially in excess of what could be achieved by any other process. When the Government took their decision, which Malcolm Wicks enlarged on in the other place, did they realise that that would be the consequence? Perhaps the Minister will say that this substantial plant would not be able to proceed at this stage. The noble Lord, Lord O'Neill, said that you can license the process from somewhere else, such as California, but that is not as good as doing it oneself. There has been some discussion of the efficiency and cost penalties of CCS. The figures provided to me show that the efficiency percentage for an integrated combined cycle plant with no CCS is 38.4 per cent. If that plant must then have CCS, that figure falls to 31.2 per cent. In terms of increased costs, a coal plant will produce electricity at about £30 per megawatt hour, a gas plant at slightly more and offshore wind at considerably more. A CCS coal plant takes that cost up to £47. It must be realised that there is a substantial cost penalty with the technology as currently envisaged. I am a strong supporter of developing this technology in one form or another, because the world has huge reserves of coal. As was pointed out in the International Energy Agency's compelling report, as reported in last weekend's Financial Times, coal demand in 2005 was equivalent to just less than 3,000 million tonnes of oil. By 2050, that has multiplied by three under the business-as-usual scenario. That will be an enormous increase because of economics and availability. In those circumstances, as the IEA says, to go ahead without carbon capture and storage would mean that there was no chance of reaching any of the CO2 reduction targets that have been mooted not only in the European Community but internationally.