13:29 Chi Onwurah (Labour)

The first industrial revolution was fuelled by coal and we are now having to deal with the consequences in the form of climate change. Clean coal, as the hon. Gentleman mentioned, is any technology that reduces harmful emissions from burning coal or avoids the need for burning coal altogether to generate electricity in a more sustainable manner.

I agree with the hon. Lady’s remarks on clean coal. She mentioned 2025, which might be a realistic time for this technology to come in, because it is unproven. Does she acknowledge an issue that all hon. Members know about, given the dependence of regions on coal, which is that the previous Government signed the EU large combustion plant directive, which mandated that, by 2015, five of our biggest coal stations will come off-stream, way in advance of any realistic prospect of CCS working? I hope, eventually, that that technology will work.

I am glad that the hon. Gentleman supports clean coal technologies. The previous Government made huge efforts to ensure that we were on track for sustainable energy to meet the appropriate emissions concerns. I will mention the timetable for carbon capture and storage, on which, as he rightly says, current coal generation capacity is dependent.

I congratulate the hon. Lady on securing the debate. Does she agree that terminology is important? Using the words “renewable energy” all the time, rather than “low-carbon energy”, can muddle the debate. Effective clean technology, should it be proved to work, will be low-carbon energy, and that is the sort of descriptor we should be using, rather than “renewable”.

My concern is the real possibility that if the UK does not act now, companies will not invest here; they will reprioritise their investments away from carbon capture and storage and away from the UK. The economic potential of clean coal extends further than the direct jobs created in the industry and the supply chain. As has been mentioned, it could bridge the gap to longer-term renewable energy and could keep energy costs down in the short and medium term, which will be a better deal for home consumers and for industry. In the north-east, that is particularly important, because we have many world-leading but energy-intensive industries such as chemical processing. Developing integrated clean coal processes has the potential to supply the energy needs of those important sectors in the north-east and elsewhere.

DECC’s continued delay played a significant part in the failure of the Longannet CCS demonstration project in 2010. In November last year, the Department promised that the money would be reallocated to other CCS projects, but in the autumn statement, the Treasury raided the CCS fund to spend on other projects. Coal-burning power stations still provide 28% of our electricity, rising to 50% in times of high demand. Many coal-fired stations are dependent on testing the viability of retrofitting those new technologies so as to be able to continue production past 2015, as mentioned by the hon. Member for Warrington South (David Mowat).

I thank my hon. Friend for giving way a second time. She mentioned China, and it is important for us to look at what is happening on carbon emissions not only regionally and nationally but internationally. I was lucky enough to be in China only two weeks ago, with the Select Committee on Energy and Climate Change. The Chinese put coal production in 2010 at 3.24 billion tonnes; they forecast 3.9 billion or almost 4 billion tonnes of coal per year by 2020, and then they are looking to reduce production to a steady output of around 2 billion tonnes by 2050. Does my hon. Friend agree that it is really up to us to use our engineering and manufacturing skills to get carbon capture and storage on line in the UK, giving us a great opportunity to export our manufacturing to the likes of China, which will make a huge difference overall?

I welcome the recent announcement from DECC that takes us a step closer to the first CCS commercial demonstration project; it is long overdue. We are now told, however, that the demonstration will take between four and eight years. Does the Minister not recognise the importance of being ahead of the curve in demonstrating and scaling such technology? Instead of a programme of support and a stable policy environment from the Government, we continue to see confusion. I am sure the Minister agrees that a proper energy policy requires security and a diverse source of supply. How can he reassure the House that he is doing everything to ensure that we capture the benefits of clean coal? We also need certainty. What assessment have the Government made of the economic potential for clean coal, and when will he be in a position to make a long-term decision on whether the Government will support it?

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13:48 Mr David Anderson (Blaydon) (Lab)

Until the petrol price increase of 2007 and 2008, coal was a dirty word in this place. Thankfully, finally, in those years, because of the huge, uncontrollable expansion in the cost of petrol, people began to realise that we had to look for alternatives. The alternative could and should be coal, but since those days, we have become bogged down in discussions about where we go with it. There was a bidding process in Europe and in this country, but we have seen nothing but reversals, with projects at Hatfield, Longannet and Kingsnorth all going into reverse and being dropped. If possible—I am very aware of the limited time that the Minister has—can he tell us exactly where we are with the CCS process? Will we see anything done in the near or longer term? The debate has been going on for a long time, and we have had, in effect, little if any progress.

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13:50 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

We are keen to take CCS forward with all speed. The Department has created a new division called the office of carbon capture and storage. It is not part of the old coal liabilities group, which is dealing with the historic legacies of the mining industry, but a new dynamic team focused purely on developing clean coal technologies. I hope that the hon. Lady recognises that in our message to the outside world we are already doing a great deal to signal a step change.

On carbon capture and storage, the hon. Lady talked about confusion. At a CCS conference yesterday, Jeff Chapman, who heads the Carbon Capture and Storage Association, used the word “tremendous” to describe the Government’s position. He said that he was encouraged by the speed at which we are trying to move forward and our dynamism and much more comprehensive approach.

Last year, we had to accept reluctantly that the Longannet project would not work and that we could not get the 300 MW CCS output that we wanted for $1 billion. Some aspects of the old competition were part of that process. It ruled out some of the pre-combustion technologies that we believe have a significant role to play and oxy-fuel combustion, which is another technology that could be significant. It did not take account of the £100 million cost involved in putting in place the flue gas desulphurisation technology that an old plant needs to give it a longer-term future.

Our ambition has moved on. It is not just about how to put a few projects in place, but about how to create an industry that is viable and competitive in the 2020s. That is why there is a real sense of excitement. There were 200 people at the CCS conference yesterday. Two hundred businesses attended an industry day last week, and 150 attended a previous one before Christmas. People around the world who know about the technology are looking at the United Kingdom as one of the places where they can take it forward.

I understand that I must be brief. If we are to reduce emissions by 8% from 1990 levels, when would CCS have to have proven itself and to be operational?

As with any activity involving underground coal, potential underground coal gasification operators would have to obtain a lease and a licence from the Coal Authority. It is likely that the UCG process would also release native methane, which would require a licence from Department of Energy and Climate Change under petroleum legislation. However, given the incidental nature of any natural gas release, the Department will seek to minimise any administrative burdens in that respect.

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