---

Energy Bill

There has been quite a lot of discussion about ““pre”” and post-combustion technology. I share the views expressed by my noble friend Lord O'Neill. However, this competition is about looking not only at how to capture carbon but at how to bring together capture, transport and storage. Those issues will be addressed by the winners of the competition. How that is done is as important as the technology of capturing carbon. If you cannot transport and store it cost-effectively, it does not matter how efficient your capture process is. This is about much more than carbon capture; hence, it is to be warmly welcomed. I will come back to that in a moment. There are questions about the financing of the successful competitor, and the noble Lord touched on many of them. In the end, however, this will work financially only if carbon is expensive enough. That is what this really comes down to. You can state-aid as much as you want in the experiment. I noted that the Government have ambitiously said somewhere that the financial support is for about 15 years, at the end of which they hope—rather than expect—that carbon capture, storage and transport will be financially viable. Will the Minister, simply to update us, say whether the Government are optimistic, now that the price of carbon looks as though it is firming up in the years ahead, that by the end of the period for the winner of this scheme—I think it is up to 15 years—these carbon schemes will be financially viable? Much depends on the price of carbon, but, as I understand it, carbon storage does not qualify under the European Emissions Trading Scheme for carbon credits. Am I right? If I am, will that change? If so, when will it change? If carbon capture does not qualify, it will clearly be a disaster. I assume that the latest Commission consultation paper says something about this. It is clearly an important issue. This technology also bears on discussions that we had on the Climate Change Bill and on disagreements that were aired across the Chamber, not least between the noble Lord, Lord Teverson, and me on whether CDMs will be allowable. China and India will be devastatingly badly hit if Europe and the UK limit the CDMs that qualify. Again, that will affect the financial liability of those schemes. These things are linked together in the end as they progress around the world. On pipelines and a network, a number of schemes are being proposed, the most promising of which seem to be on new-build power stations rather than on retrofitted old ones. That is really quite interesting. I declare an interest as I was for a number of years chair of the Yorkshire and Humber Regional Energy forum, which brought together producers and users of energy. Earlier this week, I visited Drax with the All-Party Group on Energy Studies. In Yorkshire, there is a proposal for a new build in Hatfield and a pipeline across to the south of the Humber Estuary, but with the intention of linking it to Ferrybridge, Eggborough, Drax and Killingholme. In other words, it recognises that in a part of the country where something like 17 per cent of the UK's electricity is generated by coal, if we do not retrofit carbon capture technology into the Yorkshire and Humber region's power stations, we will not make a big dent in emissions from coal. It is enormously important that schemes that come forward are able to make sense of the transport schemes that prevent every coal-fired power station having its own pipelines, outlets and so on. That seems to be madness. I would not expect the Minister to make any comment today because competitions are on and submissions will be in, but it is enormously important that proposals are considered that have a hope of building up a proper transport network as well as dealing with the technology issue. I would be grateful if the Minister could inform the Committee about where we stand on carbon emissions capped in this way in the Emissions Trading Scheme. That is a fundamental issue.