16:54 Laura Sandys (South Thanet) (Con)

As part of the armoury to combat climate change, it is essential that we promote technologies that can capture carbon and restrict emissions. I would very much prefer our default option to be low carbon at the point of generation, but carbon capture and storage offers greater flexibility in the energy source, and as a technology it will be important for coal and gas-rich economies.

I have to admit that I am not a techie, but—my word—CCS is an incredibly complex route for achieving carbon-free fuels. I sometimes accuse the energy sector of being over-engineered, but CCS is an engineer’s dream. Extraction, transportation and deep-sea storage—quite a feat to rid us of waste that in some minds should not have been emitted in the first place.

Carbon utilisation is not only a fringe area of interest. Sir David King, now the Foreign Secretary’s special representative for climate change, even highlights carbon dioxide conversion and use as one of the top 10 emerging technologies for 2013-14 on behalf of the World Economic Forum. The US is investing $1 billion in carbon capture and utilisation research; Germany is investing £118 million and the Chinese are making it a key part of their carbon management programme. What can be done with CO 2 that would add to the greater good, rather than its merely being regarded as waste? Sir David King’s group states that the conversion of

“unwanted CO2 into saleable goods can potentially address both the economic and energetic shortcomings of conventional CCS strategies.”

A leading group of scientists from Imperial college, while warning that carbon capture and utilisation must work in conjunction with CCS, agree that there is potential for conversion into liquid fuel. They also agree that captured carbon need not simply displace conventional petrochemicals. Some say that, in the longer term, polymers could be used for sustainable packaging and construction materials, as a by-product of CO 2 . The universal key reservations, however, are scale and whether enough added value could be created by the end of the process. No one is saying that the technology will change the world of carbon overnight or that we should halt our focus on carbon capture and storage, but utilisation and reuse should be part of the mix. We want to get rid of landfill onshore, so why do we want to create a different sort of landfill offshore?

This debate aims to raise the profile of the utilisation of carbon, to rehabilitate carbon and offer it a second chance—or even a second life. I ask the Government to consider the following policy interventions. Although carbon capture and storage will be the main focus of decarbonising fossil fuels, to what extent have the Government focused on utilisation, particularly in light of Sir David King’s belief that CCU could be a game-changing technology?

The US and Germany are putting huge investment into research. What is the current spending on research on carbon capture and utilisation in this country, and should we be looking at it again as a priority? Did the carbon capture and storage cost-reduction taskforce examine the cost implications and potential benefits of utilisation, such as chemical and/or liquid fuels? If carbon capture and utilisation could be scaled up or work in conjunction with carbon capture and storage, would it attract contracts for difference? The big potential prize of carbon capture and utilisation is its transference into liquid fuels. As we know, one of our biggest challenges is decarbonising the transport sector. Could CCU play an important part in the decarbonisation of that sector, and help deal with such a vexatious and challenging issue?

Carbon capture and utilisation is an excellent example of the circular economy that keeps products within the productive sphere rather than leaving them as a waste product, and turns a malign substance into an economic asset. Although there is much that we still need to overcome, with economic and engineering challenges that are also shared by carbon capture and storage, CCU could become an integral part of our decarbonisation strategy and could deliver innovation. Perhaps some game changers might even emerge. It is early days for utilisation of carbon, but as we are still a while away from fully functioning carbon capture and storage, utilisation technologies have time to catch up. With a bit of Government help and encouragement, that could be achieved for all our benefit, both here and globally.

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17:02 The Minister of State, Department of Energy and Climate Change (Gregory Barker)

I agree with my hon. Friend that carbon capture and use is an interesting, albeit nascent, approach and one that we are already investigating in the coalition as part of our broader CCS programme. CCU refers to technologies that can capture and then convert waste CO 2 into commercial products of value—for example, construction materials, biofuels, fertilisers, polymers or even the fizz in a Coca-Cola. CCU can be seen as a subset of and complement to carbon capture and storage, which is the focus of our current long-term approach. Many people, particularly in China and the US, also use CCU to refer to enhanced oil recovery, where waste CO 2 is used to increase the amount of oil recovered from a field, although I do not think that is what my hon. Friend was getting at.

Let me first remind my hon. Friend about why we are pursuing CCS, including CCU. Coal and gas currently provide the majority of our electricity in the UK—still, I am afraid, nearly 70% in 2012. They also represent a key source of our carbon emissions. The energy supply sector remains the single largest source of UK emissions today. We must reduce those emissions if we are to meet our climate change ambitions. CCS and CCU can help us do that, and let us continue to enjoy the benefits of flexible fossil fuels without emissions. That is particularly important for global efforts to reduce emissions, allowing countries to make use of indigenous resources while they transition to a low-carbon model.

That approach can also help us meet our emissions targets in a cost-effective way. The Energy Technologies Institute estimates that successfully deploying CCS could cut the annual cost of meeting our carbon targets by £32 billion, or up to 1% of GDP, by 2050. CCU has the potential to add even further value to that. For those reasons the Government see CCS as an important part of our energy policy and a core element of our approach. We are taking forward a comprehensive package of measures, with significant funding, to build the first commercial scale CCS projects and establish conditions that encourage the development of a wider industry.

On polymers, we are supporting Econic Technologies, an innovative spin-out from Imperial college, to develop polymers using CO 2 rather than hydrocarbons. With support from the Department of Energy and Climate Change, Econic has already tested its idea, using CO 2 captured from the DECC-funded CCS pilot at Ferrybridge, a power station in Yorkshire.

CCU also forms an important element of the current techno-economic study into industrial CCS, which was commissioned by the coalition Government in October 2013. That was recommended by the CCS cost reduction taskforce, which the coalition set up. We expect a final report to be published this spring. Those work streams, led in the coalition by DECC and our partners, will help us to assess which CCU technologies are viable and what role they could play in the future. CCU covers a broad range of technologies and each needs to be evaluated individually.

Back in the UK, if some of the CCU projects prove to have significant potential, they will need a constant supply of CO 2 . This is where our wider work on CCS comes in: getting the first commercial-scale projects built and laying down the UK’s first CO 2 transportation infrastructure. We also need to prove our CO 2 stores in the North sea, which will be needed even if CCU takes off. As my hon. Friend noted, given the huge scale involved, few scientists can envisage full utilisation of CO 2 from generation.

We have introduced a comprehensive package of measures to develop CCS in the UK, as set out in the coalition’s CCS road map. We recognise that that is most important for confidence in CCS and to kick-start wider deployment to get the first projects up and running in UK conditions. The coalition’s £1 billion competition is designed to help that to happen and we are making good progress.

In December 2013, the coalition awarded the White Rose CCS project a multi-million pound contract for a front-end engineering design study of its bid. The proposal is to build a new state-of-the-art 426 MW-equivalent clean coal power plant with full carbon capture and storage, bringing clean electricity to more than 630,000 homes and capturing approximately 2 million tonnes of CO 2 per year. That will link into the planned development of a CO 2 transportation and storage infrastructure—the Yorkshire CCS trunk line—with the capacity for additional projects in the area.

We are also looking beyond the first project, reflecting the coalition’s ambition in this area. We want a strong and successful CCS industry able to compete on cost with other low-carbon technologies in the 2020s, and to deploy up to 13 GW by 2030. Our policies are designed to help to bring CCS to the point where it can compete with other low-carbon technologies. Our electricity market reform programme will provide certainty and a route to market for CCS projects in the UK.

As my hon. Friend knows, the second Energy Bill of this Parliament received Royal Assent just before Christmas, and we are now working to develop the contracts for difference for CCS. My hon. Friend also asked about contracts for difference for CCU. We do not believe that utilisation is currently available on the scale needed for commercial electricity generation, but if utilisation became established as a viable technique for permanently avoiding the release of large quantities of CO 2 , there is no reason in principle why the clean electricity produced should not become eligible for contracts for difference. I hope that that is the answer she wanted.

We are focusing on how else we can strengthen the business case for CCS projects. We are trying to learn from overseas experience, and we have seen in north America how enhanced oil recovery using CO 2 has played a crucial role in the development of CCS projects. Some people believe that this is a type of CCU and have adopted the abbreviation CCUS for carbon capture utilisation and storage.

Conditions here are different, but we are exploring with industry whether enhanced oil recovery might have an important role in UK CCS projects and in extending the supply of North sea oil. We have undertaken a detailed mapping exercise to estimate potential and held a workshop with industry to inform the coalition’s approach. We know that CCS could be important for industrial, energy-intensive sectors, and in December 2013 the Prime Minister announced agreement on the Tees Valley city deal, which includes funding for a feasibility study on industrial CCS.

On the inclusion of CCU in the IPCC best practices for greenhouse gases, I should say that it would be sensible if, when CCU activities lead to permanent storage of CO 2 , such activities were reflected in the IPCC in respect of how to report emissions.

Our £125 million research and development programme is keeping the UK at the forefront of CCS innovation and the global race for clean energy. Our electricity market reform programme has passed the significant milestone of Royal Assent for the Energy Bill. All told, we are set for a very exciting future.

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