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Energy Bill

My Lords, my noble friend’s question was very interesting because it related to the resources that should be deployed on this issue. As we had extensive debate in Committee, I understand the positions of the noble Baroness and the noble Lord, Lord Teverson, and I appreciate that in an ideal world the Government could conjure up resources from any quarter and invest in developing strategies and competitions for every conceivable solution to the enormous challenges that we face on the question of carbon capture and storage. However, government is about choice and the effective and accurate deployment of scarce resources. I understand when the noble Lord, Lord Teverson, says that others are busy in this field. Of course they are: when this issue is crucial to how we tackle climate change and meet our carbon targets worldwide, does anybody think that the United States is likely to stand idly by, when it is all too well aware of the potential marketability and advantages of producing an effective carbon capture and storage system? Norway is, of course, also interested since it has extensive gas and oil areas, parts of which can now be used for carbon storage as they are exploited, provided the technology can be established. Those countries will play their part and, of course, Germany and other countries in the European Union are looking at this issue. What I want to emphasise is, contrary to the two contributions from the opposition Front Benches today, how much progress the Government are making in this area. We are significantly in the lead. The Bill is an enabling framework that will allow the safe storage of carbon dioxide offshore. It does not address the capture or transportation elements of the carbon capture and storage change and, as such, does not provide for government competitions for carbon dioxide storage demonstrations, or regulate the type of technologies that may be deployed via such competitions. In other words, the provisions are technology neutral. The Government already support a range of technologies through a variety of different initiatives, including the Environmental Transformation Fund, which was set up in April to encourage and fund industry-led demonstration of carbon abatement technology projects, including CCS. To date, more than £2.2 million has been granted via the fund, £8.8 million for various research projects supported by the research councils and the Technology Strategy Board. We have championed the inclusion of CCS into the EU-ETS directive and pushed for a European-wide financing mechanism for CCS, because it is clear that we will solve these problems not on a national basis alone but on a much wider basis, in which the European Union plays its part. We are also hosting the Carbon Sequestration Leadership Forum ministerial conference in London in autumn 2009. The meeting will provide a forum for the examination of key carbon capture and storage issues among the political and industry leaders. All the initiatives that I have outlined give equal status to all carbon capture technologies, which is consistent with the Bill and the amendment. I hope therefore that the noble Lord will feel reassured that the Government see CCS as a priority. We are showing global leadership in facilitating its demonstration and deployment, irrespective of the type of carbon capture technology. The only area in which the Government have had to make a deliberate choice regarding a capture technology is in relation to our competition for a commercial-scale demonstration project with power generation. There are sound reasons why we have made this choice. The potential contribution of CCS technologies in mitigating global climate change cannot be underestimated. I know that the amendment was inspired by exactly that consideration—by just how important CCS is to the issue of global climate change. The Stern report envisages that CCS would need to contribute up to 28 per cent of global carbon dioxide reductions needed by 2050. That is a massive contribution to the overall challenge that faces the whole world. This clearly indicates the importance of remaining focused on CCS as a global solution. For it to be deployed on such an extensive scale, the technology first needs to be demonstrated on a commercial scale. That is why we announced that we will support one of the world’s first projects demonstrating the full chain of CCS technology on a commercial-scale power station. The key objective of our project is to demonstrate a technology that is relevant and transferable to global markets. It is of fundamental importance that actions we take in the United Kingdom can also assist other countries in taking steps towards tackling their own emissions. Climate change is a global problem that requires multilateral and multinational solutions. The House will appreciate that coal consumption in power stations in Europe is dwarfed by the amount of coal used elsewhere in the world, particularly India, and of course with the enormous growth of China. One extraordinary fact is that China builds one coal-fired 1-gigawatt power station every four days. That translates to the equivalent of two new Drax 4-gigawatt power stations every month. That is the scale on which China is expanding its power production. That is why we have to look at this issue in terms of the contribution which the United Kingdom can make. I hope that I have already reassured the House that we are very much in the lead on this issue. There are also immense implications and, indeed, opportunities if we get the technology right. There are also clear advantages of focusing on post-combustion coal technologies. Depending on the type of power station built and the rate of construction, it is estimated that the new-build coal-fired power stations in China alone could emit around 260 million tonnes of carbon dioxide each year. That is almost double the carbon dioxide emissions from the whole of the United Kingdom economy, not just power, but transport and heat as well as electricity. The fact that post-combustion technology can be retrofitted to existing power plants ensures that carbon dioxide emissions that are otherwise locked in through existing and planned new-build power stations can be tackled by installing post-combustion carbon capture technology in the future. Noble Lords should contrast that with the issue that we are being invited to consider in the amendment. The deployment of pre-combustion technologies is not yet widespread, and it may take years for this to become the case. Because pre-combustion technologies cannot be easily retrofitted, they will have, however successful they are, less relevance over the medium term, when the focus must be on controlling emissions from key developing countries such as India and China. I hope therefore that I have explained why early demonstration of post-combustion capture, which can be readily retrofitted, is absolutely fundamental to combating carbon dioxide emissions on a global scale. I am confident that we have made the right decision in focusing the competition on post-combustion and stand wholeheartedly behind this decision. The noble Lord has deployed his case with his usual skill. I know that we are criticised for supporting one commercial-scale demonstration project, yet supporting one project alone represents a significant public commitment that only two other countries in the world are matching. To suggest that the Government should be supporting two or three demonstrations is simply not realistic. We are doing more than any country in the world in this area. That is something in which the House should take pride, rather than being overly critical. In summary, while—