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Draft Overarching National Policy Statement for Energy (EN–1)

My Lords, I have discussed this matter with Department for Transport officials and I will ensure that the point raised by the noble Lord is communicated to them. On the Motion of the noble Lord, Lord Teverson, first, I thank him for his kind remarks. It felt a bit like an obituary, but I hope it is not so. Energy is a fascinating brief, it has been a great privilege to debate these matters and I hope that I will be able to do so in the future. The emissions performance standard is a difficult issue. As the noble Baroness, Lady Young, suggested, that is why we are having this debate. Of course, we have to reduce emissions from our fossil fuel power stations. We already have the EU Emissions Trading Scheme, but I recognise that it is not, on its own, sufficient to reduce emissions from the power sector to the extent required. That is why we have the policy of developing renewables and new nuclear and clean coal. In order to develop clean coal, we have introduced the most environmentally ambitious standards for new coal-fired power stations anywhere in the world. Of course, with the full chain of CCS processes still not proven at a commercial scale on a power station, we know that legislation and planning frameworks are not enough. That is why we are providing crucial practical assistance. We debated some of this during the Second Reading debate on the Energy Bill only last week. We have made it clear that we expect participants in the CCS demonstration programme to retrofit CCS to the full capacity of the power station by 2025 and our aim is that coal-fired power stations built after 2020 are fully CCS from day one. I come to the point raised by the noble Baroness, Lady Young. The time to consider measures such as an emissions performance standard is when the technology has either been proven at commercial scale or has been found not to work. Our worry is that to set a standard now, or at any time before we have seen results from the demonstration programme, is really not the way to go. Accordingly, we are committed to a rolling review process, which will report by 2018, to consider the appropriate regulatory and financial framework required to facilitate the full transition to clean coal. As the noble Baroness said, the new reporting measures in the Energy Bill will inform this process, as will the future reports of the Committee on Climate Change. The new reporting regime guarantees that Parliament has the opportunity to challenge the Government on delivery of CCS. Our real concern is that the introduction of an emissions performance standard would create a level of uncertainty in the industry that would significantly undermine plans for investment in new fossil fuel generation plant. That would put at risk the demonstration of CCS and any delay in investment in gas-fired power stations will pose significant risks to our security of supply. I know that there are concerns at what has been described as a potential dash for gas. This is not the intention of our low-carbon strategy, nor do we believe that it will be an outcome. The low-carbon transition plan sets out policies to deliver 40 per cent of our electricity from low-carbon sources by 2020. The energy market assessment, to which I have already referred, is concerned with ensuring that we have the right market mechanisms to get the right balance between the different energy technologies and to meet our emission reduction targets. The investment issue is therefore a very serious one. The energy industry, the CBI and the TUC have made it clear that it would have an adverse impact on investment in new power generation. The Committee on Climate Change did not recommend the introduction of an EPS at present. We think that the introduction of an EPS at the moment would be premature, but we will listen to this very carefully and as the years go by, as we see the outcome of the CCS, we might have to come back to the point. I do not disagree with the noble Lord’s reasons for wishing to pursue this, but we have a real concern about a hiatus on investment. We need to see how the CCS scaled-up projects develop before we come back to the point. This has been a very interesting debate; I think that parliamentary scrutiny of the national policy statements has been very effective. My department now has a great deal of work to do in order to come to a final view, but I have no doubt that it has been very valuably informed by our debates in your Lordships’ House.