14:30 Mr Mark Spencer (Sherwood) (Con)

I turn to the environmental side of the argument. Despite legally binding targets to reduce greenhouse gas emissions, in 2008 91.5% of UK energy supply was met by the use of carbon-intensive fossil fuels. We need to address that figure seriously if we are to, first, meet our energy demands and, secondly, reduce this nation’s carbon footprint.

Carbon dioxide capture and storage—CCS—is the critical enabling technology that would reduce CO 2 emissions significantly while also allowing coal to meet the world’s pressing energy needs. It is important to recognise that this is a global issue. While we are considering UK energy generation, it would be foolish not to observe what is happening on the rest of planet Earth. I have already mentioned China and the number of power plants that it is producing. If we can find, develop and enhance CCS technology, we could position ourselves well in the world.

CCS is a means of mitigating the contribution of fossil fuel emissions to global warming. The process is based on capturing CO 2 from large point sources, for example power stations, and storing it in such a way that it does not enter the atmosphere. CCS can also be used to describe the “scrubbing” of CO 2 from ambient air as a geo-engineering technique. Although CO 2 has been injected into geological formations for various purposes, the long-term storage of CO 2 is a relatively new concept. The first commercial example of its use was at Weyburn in 2000.

I want to explore the three groups into which CCS can be split: post-combustion; pre-combustion; and oxyfuel.

I congratulate my hon. Friend on securing this debate, not least because I live opposite Drax power station, which is the most efficient, cleanest and biggest coal-fired power station in the country. Is he aware of the consultation that is going on in my own village of Airmyn today, between 2pm and 7pm, which relates to the National Grid’s proposal for a CCS pipeline that would serve the steelworks at Scunthorpe as well as the power stations across north-west and south Yorkshire? As I say, that consultation is going on at the moment. That pipeline is an exciting prospect and it offers the possibility of extending the life of some of our power stations.

The second group of CCS technologies is integrated gasification combined cycle, which is a pre-combustion technology. IGCC is a near-zero-emissions clean coal solution for the UK. It would significantly reduce CO 2 emissions as well as providing pressurised gas for injection into North sea oilfields, thereby enhancing the recovery of oil reserves, which is known as enhanced oil recovery. Powerfuel is now constructing one of Britain’s first IGCC clean coal power stations in Yorkshire, again using British coal from an adjacent colliery. I will try to put the process into simple language. It sometimes becomes very difficult to extract crude oil from wells and there is a technique whereby the CO 2 can be mixed to reduce the viscosity of the oil, allowing the oil to be removed from the wells more easily.

Super-critical power plant is a type of clean coal technology whereby it is possible to retrofit this technology to the power stations that we already have. The benefits of operating a super-critical power plant over a conventional plant are clear. Conventional boilers have an operating efficiency of about 30%, which means only 30% of the energy in the coal is converted into electricity with the rest being lost as heat. Super-critical boilers have efficiency levels of around 42% to 46%, so more energy is directed to turning the turbines to generate electricity and therefore less greenhouse gas is produced per kilowatt-hour. Improving the efficiency of boilers used in coal-fired power stations not only reduces CO 2 emissions, because less coal is needed to generate the heat energy that turns the steam turbines, but it results in higher generator efficiencies in the provision of the electricity. The boilers are available commercially and can be retrofitted to existing coal-fired plants, which means no major retraining of staff, faster deployment and reduced capital costs with greater efficiency. It seems like a win-win situation to me.

Doosan Babcock Energy has stated that Britain could cut the cost of reducing greenhouse gases by £3 billion if it fitted such clean technology to its ageing power stations. Lobbying goes on for Government to introduce a form of incentive for power generators—one similar to the renewables obligation certificates—to invest in clean coal technology. Creating such an incentive seems the right thing to do and I hope that this debate will assist the Government in some of their thinking, and perhaps we can consider supporting this technology.

Carbon capture and storage in a coal-fired plant would cost just over £20 per tonne of CO 2 , while the figure for a gas-fired plant is about £30 a tonne. It could be argued that that is because a coal plant produces more, but coal is certainly cheaper per tonne than gas for CO 2 emitted. Using CO 2 for enhanced oil recovery can generate revenue that offsets the other costs of CCS. The cost of storing CO 2 in aquifers is close to £l per tonne, and the cost of storing it in oil and gas field plants ranges from £1 to £20 per tonne. Therefore, as well as being fairly reasonable, this method could generate income if we can get it right and make it work. Depleted oil and gas fields are the first sites to be considered for storage capacity because they are known to be equipped with infrastructure such as pipelines and platforms, and are almost ready to run now.

On the merits of clean coal technology for the environment, the biggest long-term problem for coal is its carbon dioxide level. Approximately 90% of the CO 2 produced by a coal-fired power station could be captured with CCS, and CCS could help to make up to 20% of the global cuts in emissions that are needed by 2050. Therefore, if we can find the technology that will work, we can sell it to the world, continue to use coal and at the same time cut the amount of CO 2 being released into the atmosphere.

I shall now address the point raised by the hon. Member for Blackley and Broughton (Graham Stringer) on wind power and explain why I feel that wind power is not adequate to support our needs. Fitting clean coal technology to the UK’s 16 power plants would cost an estimated £6 billion. In comparison, 2,000 wind turbines will be put up in the UK over the next six years at a cost of £9 billion. The Government’s renewable energy policy is currently over-dependent on wind energy. That imbalance is largely the result of the renewables obligation, which provides no clear boundary as regards the merits of various renewable technologies, so the cheapest option in terms of start-up costs—wind power—has been pursued, irrespective of its failures on grounds of unreliability and secure energy.

I am conscious that I am taking up quite a lot of time, and I know that other Members wish to speak, so I will try to conclude as quickly as possible. If we look at the international competition, it is clear that we need to step up and ensure that we keep up with, if not stay in front of, the competition in terms of producing clean coal technology. In 2009, the Australian Government produced a White Paper entitled “Securing Australia’s Energy Future”, which backed the use of clean coal technology with coal from indigenous reserves, and UK climate change economist Sir Nicholas Stern recently told an Australian audience:

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15:18 Jackie Doyle-Price (Thurrock) (Con)

At its peak, Tilbury employed 750 people. Today it employs 250, in highly skilled jobs. It was facing closure in 2014, which would have left a big hole in the economy of Tilbury, which is quite a small town. The power station generates more than 1,000 MW—enough to power 1 million homes. It has never breached its environmental licence, in 50 years of operation. Looking at the debate from the point of view of climate change and environmentalism, it is worth bearing that in mind, particularly as the general manager tells me that when sulphur emissions in the locality have been measured at dangerous levels it is not because of the power station but, generally, when there is traffic congestion on the A13 and the M25. That raises the question whether we are looking at the right things, in our rush away from coal.

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15:27 Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)

Many hon. Members have spoken today of serious concerns about capacity and a future energy gap in the UK. My hon. Friends the Members for Midlothian (Mr Hamilton) and for Blackley and Broughton (Graham Stringer) spoke about the urgent need to deal with the issue, and several hon. Members have spoken about carbon capture and storage, which I shall mention later. I want to focus my remarks on how coal-fired power stations fit into Britain’s transition to a low-carbon future, and the integral role that clean coal has to play as we reconcile the competing demands of reducing the country’s greenhouse gas emissions and ensuring that enough energy is generated. I want also to highlight some of the challenges that we face.

It is clear that a low-carbon future will not be realised without some contribution from fossil fuels. The urgent challenge that we must overcome is how to ensure through the use of technological innovation that the fossil fuels that we use are cleaner. The UK must be a world leader in investment, research and development, infrastructure and planning across our energy portfolio; but the window of opportunity is closing. We have drifted from 2010 to 2011, still awaiting crucial decisions: from the re-banding of ROCs, to grid investment, to the detailed sign-off on the first CCS project.

At the UK coal conference in February the Minister said that detailed sign-off for CCS1 would be confirmed by July, but when the Energy Bill was in Committee he referred instead to the summer. I would be grateful if he clarified when we will have detailed sign-off of that crucial first CCS project.

At the risk of stating the obvious, it is worth explaining why we are where we are. A quarter of the UK’s energy generating capacity will close by 2018, and as much as 30% will need to be replaced by 2020. Without prompt action, we face an electricity generation gap in the next 10 to 15 years as our nuclear and coal-powered stations are retired. World energy demand is rising and highly politicised. As North sea reserves decline, we are increasingly reliant on imported oil and gas, and UK electricity demand is forecast to double over the next 40 years. Adapting to that increase in demand will require a rapid decarbonisation of our electricity supply and a diversification of the energy sector, moving us from a reliance on fossil fuels and unabated combustion, to an increased use of low-carbon and decentralised energy.

We need a new energy mix, combining renewables, new nuclear and clean coal, but to achieve that mix and meet our climate change targets we will be required to urgently develop carbon capture and storage technology alongside renewables. We will need to create sufficient capacity to meet electricity generation needs at all times, and we will need to put the necessary supply chains in place. We will require the development of smart grid and electricity networks to meet the needs of a reconfigured, smart and diverse electricity infrastructure and, of course, investment in coal and gas infrastructure. All that does not come cheap. Depending on what we read, it could cost between £200 billion and £450 billion to achieve. I have only touched upon the future of coal in the UK energy mix, but it has a strong future.

and he is right. Coal is the most abundant worldwide energy resource, yet, unabated, it is also the most polluting. Without finding a way to reduce its harmful effects, we will not be able to tackle climate change.

The question we therefore face is: how do we ensure that the lights do not go out while at the same time meeting the need for greenhouse gas reductions of at least 80% by 2050? In government, Labour committed to funding the first commercial-scale CCS demonstration plant, so we welcomed the coalition’s decision to continue it. As I mentioned earlier, however, we are still waiting for the detailed sign-off of that project.

It is not just the direct funding for CCS that is required. We need to build the right infrastructure, conduct further research and development into CCS projects, and develop innovative financial mechanisms to devise solutions to the financial challenges facing CCS. We are encouraged that the current CCS demonstration already includes support for nascent infrastructure that will be needed to support the deployment of CCS, but more needs to be done to develop the infrastructure of pipelines and encourage clusters of those facilities in certain areas beyond the demonstration phase.

What work has the office of carbon capture and storage at the Department of Energy and Climate Change done to ensure that those coal-fired power stations that may come forward are able to share infrastructure, such as pipelines and capture plants, with industry, to reduce the overall cost of CCS and to make those plants more economically viable? How will the electricity market reform proposals ensure that a viable supply chain can develop to deliver CCS retrofits to a time that is compatible with our decarbonisation trajectory, as set out by the Committee on Climate Change?

If CCS is to be an integral part of our future energy security and carbon reduction—although we have to prove the technology on a commercial scale first—and if we wish to be at the forefront of the technology, so that we capture the benefits for the domestic and export markets in the future, from China, to India, to Brazil, to the US, we must provide the means. In fact, we have a duty to develop this technology, alongside our European neighbours, because with rising global use of electricity generated by coal, the downsides of delay are significant.

Any delay in the roll-out of CCS will mean higher atmospheric concentrations of CO 2 , which in turn will mean that subsequent attempts to limit temperature rises to less than 2°C will be harder to achieve. Some calculations suggest that for every year that widespread global deployment of CCS is delayed after 2020, the long-term atmospheric stabilisation level of CO 2 increases by one part per million. Therefore, if we delay by more than a decade, the stabilisation of atmospheric concentrations of CO 2 at lower levels becomes near impossible. According to the International Energy Agency, without CCS and if we were to rely on other technologies alone, the costs of tackling global CO 2 emissions will rise by more than 70% each year. In simple monetary terms, it is a cost of $1.3 trillion annually by 2050.

Despite concerns from those representing coal-fired power stations, particularly about the burden of an extra layer of legislation and the fact that it will apply to new-build stations, the right EPS, for example, could help drive investment in carbon capture and storage, but only if it is set at an intelligent level. In written evidence to the Energy and Climate Change Committee in January, energy solutions company Alstom said:

“An EPS at a technology-neutral level from, say, 2020, could provide support to the deployment of CCS, increasing the diversity and security of supply by enabling continued, but decarbonised, use of coal.”

As such—and while recognising the positive intention of the EPS to ensure that no new coal-fired power station should be built in the UK without CCS, and the danger, highlighted by Alstom, of the wrong EPS level resulting in no new coal builds—this makes it even more critical that the Government drive on with the four CCS projects, pre and post-combustion, with urgency.

In conclusion, coal is important to the UK’s energy future—as clean coal—to provide the bridge over our energy gap and to a low-carbon future. However, we face significant challenges and must move quickly to develop the required technology to overcome them, if we are to tackle the dangerous threat posed by climate change. I would be grateful if the Minister addresses in his closing remarks the issues I have raised.

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15:39 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

The imperative of tackling climate change means that we will need to decarbonise our electricity system. In the future, our energy supply will have to be diverse, adaptable and clean. The technologies that can help to deliver that are: nuclear, which should be built without public subsidy; renewable, including biomass, to which I shall return; and fossil fuels with the use of carbon capture and storage. I absolutely agree with the hon. Member for Midlothian (Mr Hamilton) that this should not be a debate about one technology versus another. We need to secure a tremendous amount of investment in our energy infrastructure, and we should be encouraging that to come from a wide balance of resources. I hope that we can agree that our energy security is enhanced by the breadth of that investment portfolio.

As my hon. Friend the Member for Sherwood mentioned, there is certainly a case for having back-up at times when the wind is not blowing, but that would not necessarily have to be coal; it could be gas. At the moment, the investment case would be much stronger for a new gas power plant than for coal with CCS because of the relative costs. That back-up supply could also be provided through interconnectors. For example, an interconnector to Norway could provide a huge amount of potential clean electricity and there could also be additional interconnectors to France or Iceland. They could be part of that process. During this decade, other storage technologies have been developed, such as battery, the use of hydrogen, compressed air or heating hot water. Those are all ways in which one can enhance the reliability of the renewables sector. Nevertheless, we recognise—and the structure we are looking to put in place recognises—that there will also need to be back-up power plant available.

The hon. Member for Liverpool, Wavertree (Luciana Berger) said that we had been drifting in terms of some targets, but I believe it is hard to see that drift. She talks about drifting on the CCS time scale, but in fact, we will secure that first project much quicker than was anticipated under the previous Administration. She talked about us drifting on the renewable obligation review; in fact, we have brought that forward by a full year from the time scale we inherited precisely to give clarity to investors. Where there was ambition before, we have decided to match that with a delivery programme, and put in place a road map for the development of carbon capture and storage, a dedicated Office of Carbon Capture and Storage and a developers forum to identify the barriers to investment, so that we can directly focus on those. I hope that we are putting in place a clear programme whereby we are saying, “We understand what the challenges are. How do we make dealing with those a reality?”

Carbon capture and storage is not a luxury add-on; it is a fundamental part of our energy approach. We recognise the role that coal and gas will play for many years. That is possible with CCS in a way that could not happen without the development of CCS technology. I am pleased to see the progress in this country at a time when we see CCS deployment slipping back in other countries—Norway has put it back to 2018, and Holland is just delaying it, as are other projects elsewhere in the world. Britain remains one of the leaders on this. The £1 billion is the largest contribution that any Government anywhere in the world has committed to a single project. We have built on the work of the previous Government. Paddy Tipping referred to this as the competition without end, because it was going on for so long. I am glad that, in the course of the next few months, we hope to bring that to an end, although it is a complicated process.

Energy remains a retained power. Clearly, the Scottish Government have decision-making powers on planning. That is why they have ruled out such things as new nuclear in Scotland. Nevertheless, energy policy is driven from Whitehall and Westminster. We therefore believe that if this is something that we want to achieve as a national Government, then we should be in the driving seat. If the Scottish Government were to say, “Here is a few million pounds to make it happen”, we would of course be very enthusiastic and grateful to them, although there are not many indications so far that the cheque is in the post. Nevertheless, this will be taken forward by us, as a Government and as the Department of Energy and Climate Change, with a cross-party approach here, and I hope that we can find that agreement in the course of the next few months.

I would say to my hon. Friend the Member for Sherwood that this is a technology that is still in its infancy. We know that the individual parts of it can work. We know that it can be separated—we have seen that done on a small scale. We know that it can be transported and we know that it can be injected into the sea bed. However, nobody in the world has done that at scale, so we do not yet know what the challenges are of doing that at scale, or what the costs will be. In terms of a time scale, to have four projects running by 2020 is extremely ambitious. We are not going to arrive at a stage where we can move it beyond that. We can absolutely see this technology moving forward in the 2020s. Global ambition suggests perhaps 100 projects by 2020, but 3,000 projects by 2050. This is therefore a process that will inevitably start carefully, but then build up dramatically over time. Everything that we are doing here is determined to ensure that the United Kingdom can be in a real leadership position. What we also see from industry shows that it wants to be part of that process. The NER300 process is a European competition, and almost half of the schemes coming forward for CCS are in the United Kingdom. That shows the appetite among our industry, our universities and our whole supply chain to help lead in this area.

I am grateful to the Minister for giving way, as I have taken up more than my quota of time. Given that the new technology will not be on the street until 2020, we will not be in a position to build nuclear power stations to that time scale, and renewable energy will not be large enough to make the shortfall, does he anticipate that the only way we can supply the nation will be by importing that power from our neighbours?

Finally, I want to come to the issue of biomass. I am grateful to my hon. Friend the Member for Thurrock (Jackie Doyle-Price) for the point she made on that. Electricity from biomass is important to our renewable energy targets, because it brings security of supply benefits. It is dispatchable; in other words, when we need more power, we can generate more power. It can be turned up and it can be turned down. It is one of the few renewable energy sources that is genuinely adaptable in that respect. Large-scale dedicated biomass has the potential to develop significant levels of renewable electricity by 2020. Electricity from dedicated biomass is cheaper than some other large-scale electricity sources. If biomass generation needed to meet the renewable energy target was displaced by more expensive technologies, then inevitably there would be a higher cost to consumers.

In conclusion, we believe, without any doubt, that coal can play an important role in our electricity-generating mix in the future, but only if its carbon dioxide emissions can be reduced significantly. Electricity market reform will provide the commercial incentives to deliver new low-carbon plant, and our CCS demonstration programme will ensure that there is a cost-competitive solution to the emissions from coal.

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