16:30 The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)

The amendment to the definition of “relevant grant” will ensure that grants, which are there to support feasibility studies or research and development in relation to carbon capture and storage, will not preclude participation in the capacity market. The essential feature is that the carbon capture and storage support should not have provided effective material support that would put a provider at an advantage compared with others that did not get that support. That will not be the case for such early-stage grants for CCS purposes. The regulations extend the number of days from five to 15 to enable applicants to have slightly longer to submit credit cover.

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16:35 Dr Alan Whitehead (Southampton, Test) (Lab)

Although, as we have heard, the changes were consulted on in the spring, it looks as if the main change to the regulations passed into law last year is perhaps to correct an omission. It appeared that CCS projects that had received some kind of grant support, through either European Union funding or departmental grant arrangements for early-stage developments such as front-end engineering and design, might be in a difficult state of definition as far as the pre-qualification arrangements are concerned because someone had not put the right wording in the 2014 regulations.

I welcome the new, proper wording, which clarifies the circumstances under which CCS projects will be not disadvantaged if they have received a grant, or advantaged if they have received a grant specifically in relation to a capacity market unit. Nevertheless, a problem still appears to arise, because as far as I am aware, the Government do not intend to enable CCS to access operational support to capacity markets. Indeed, on the contrary, the Government’s intention, which they made clear in their scoping document this spring, is that whereas grants will be available in advance of a contract for difference being issued for the operation of a CCS plant, operational support should in principle take place through some form of modified CFD. In the long term, that closes the door to support of any kind for CCS arising through capacity auctions, and I doubt whether any CCS developer is under any illusions otherwise.

Therefore, prudent though it may be to close the door on possible sloppy wording, I wonder whether the whole premise of the regulations is not a little redundant. Perhaps the Minister will help by clarifying those matters a little, unless CCS is intended eventually to pre-qualify for capacity auctions in its operational phases and across the board, which would be quite a turnaround in policy.

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16:39 Andrea Leadsom

The hon. Gentleman’s other point was that CCS may not ever take part in a capacity market. I am not aware that we have come to a conclusion on that either way at this point. As he will know, we do not as yet have any deployed carbon capture and storage in this country, but we are looking at it closely, and two competition projects are currently considering their own ability to develop an industry that could be very valuable for the long-term use of fossil fuels.

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