13:00 Dr. Brian Iddon (Bolton, South-East) (Lab)

Our Government have decided that energy security is a major concern, and major changes in energy supplies are under way, with less reliance on imported oil and gas in future years and more reliance on a basket of renewable energy generation technologies and nuclear fission. Coal will play a major role in future, but only if either pre- or post-combustion carbon capture technologies are incorporated in new plant, or retrofitted to old plant. That will require massive capital investment which, in turn, will result in increased energy costs.

Climate change is seen as the biggest global challenge facing mankind today. With a projected population increase from 6 to 9 billion by 2050, I see water and food security as our greatest global challenges but, of course, there is a connection. For two main reasons I believe that we should not be burning fossil fuels. First, coal and oil are larders of chemicals for the enjoyment of a high quality of life by future generations, in developed as well as developing countries. Secondly, 50 per cent. of the carbon dioxide generated since the industrial revolution has now been partitioned between the atmosphere and the seas, which cover more than 70 per cent. of the earth’s surface. In turn, acidification of those seas is causing a breakdown in the marine carbon cycle. We are losing corals, on which other marine species rely, and shellfish. In any case, burning fossil fuels is an extremely inefficient way to provide energy.

We have to get things in proportion, however. This country is responsible for only 2 per cent. of current world emissions of carbon dioxide. However, we need to show countries such as India and China, especially, but also other developing countries, that there are alternative ways of producing energy that have an overall benefit to the environment. For every unit of greenhouse gas emitted through chemical manufacturing, the resulting products enable two to three units to be saved downstream. The downstream products that result in the greatest savings of carbon dioxide, evaluated in a recent report on responsible care by the International Council of Chemical Associations, for emissions-saving enabled by the chemical industry, are insulation materials, chemical fertilizer and crop protection products, advanced lighting solutions, such as compact fluorescent lamps, plastic packaging, marine antifouling coatings, synthetic textiles, automotive plastics, low-temperature detergents, increased engine efficiency, and plastic piping.

The Government were one of the first to tackle climate change, initially through the introduction of the climate change levy. Climate change agreements allow energy-intensive industries to receive a discount on the climate change levy provided that they meet certain energy efficiency targets. More than 230 climate change agreements have been made in the UK chemical industry. However, the rebate received by energy-intensive industries will be reduced from 80 per cent. to 65 per cent. from April next year to comply with the EU energy taxation directive. That will cost the UK chemical industry £10 million, and UK manufacturing a total of £50 million. The CIA believes that the Government have gone further than necessary in meeting the requirements of that directive.

The introduction of the climate change levy has resulted in a change of behaviour in the chemical industry. The industry realised that it made sense to think about its energy usage and costs, and it changed its manufacturing processes as a result of regulation. Subsequent cost savings made those industries more competitive. Based on 1990 levels, the chemical industry reduced world CO 2 emissions by between 8 per cent. and 11 per cent. by 2005, according to the IPPC. Since 1990, the UK industry has improved energy efficiency by 35 per cent., which is equivalent to a saving of more than 2 million tonnes of CO 2 .

Britain has set itself some tough targets. We were the first, with the Climate Change Act 2008, to introduce climate change legislation. That Act enshrined in law the reduction of UK CO 2 emissions by 80 per cent. by 2050. The EU emissions trading scheme, which works on a cap-and-trade basis, is central to the UK’s long-term policy of reducing CO 2 emissions. Under the emissions trading scheme directive, large emitters of CO 2 in the EU, including in the energy-intensive chemical industry, must monitor and report annually on their emissions of greenhouse gases, and are obliged to return emission allowances equivalent to their annual emissions, currently to the Government. To do that, they may have to buy or sell emission allowances on the market.

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