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Carbon Capture

Volume 467: debated on Thursday 22 November 2007

The Secretary of State for Business, Enterprise and Regulatory Reform
(Mr. John Hutton)

On Monday my right hon. Friend the Prime Minister launched the competition for a commercial-scale carbon capture and storage demonstration project. My Department will support up to 100 per cent. of the additional capital and operating costs of the project, which will be selected through a competitive process. In addition we have a £35 million programme for carbon abatement technologies, including CCS.

I am grateful for that reply, and for this important initiative. Does the Secretary of State accept that the electricity generators feel that there have been long delays in bringing the programme forward? Secondly, there are concerns about the kind of technology being evaluated—post-combustion rather than pre-combustion. Can he say whether there will be only one winner of the demonstration project, or is there scope for more applicants?

My hon. Friend is right to raise those points. I have great respect for him, and I know that he is a strong supporter of what we are trying to do. Given the technical complexity of the technology it was right and proper for the Government to select one type of competition to run. When we have done that, clearly we have to make a choice. It is worth reminding ourselves that only two other countries in the world are seeking to develop projects like this. Post-combustion technology will give the United Kingdom a potential leading role in developing this important technology, which could play a significant role in meeting our carbon reduction targets by 2050. I understand my hon. Friend’s frustration. We are trying to move forward as quickly as possible on this project, but given the scale of the technology and the issue of public finance, it is right that we make these decisions appropriately.

Given that the first proposed UK carbon capture and storage demonstration plant seems at least seven years away, as the hon. Member for Sherwood (Paddy Tipping) implied, how will the Secretary of State ensure that new fossil fuel generating capacity will necessarily include the CCS capability to meet the emissions goals? What carbon price does he estimate will persuade UK energy producers to include CCS in their fossil fuel-based generation designs as a matter of course?

I am grateful that the hon. Gentleman is a supporter of what we are trying to do and carbon capture generally, as I hope all hon. Members will be. In relation to his two points, we will be publishing some proposals in the very near future on aspects of capture readiness which should be included in the consenting process, and how this might work in practice. On the economics of carbon sequestration, we want to see a much more robust and strengthened trading scheme. Clearly that must involve a much higher price for carbon. We need to see how phase 2 beds in and then we have important decisions to make for phase 3, which will be the moment when we have to address the issue that the hon. Gentleman raised.

May I tell my right hon. Friend that when the Trade and Industry Committee met staff of the EU Commissioner for Energy we were told by an energy economist that what was required in the United Kingdom were four demonstration plants and 15 in Europe. To judge from what my right hon. Friend has just said to my hon. Friend the Member for Sherwood (Paddy Tipping), we are not going to see that kind of investment in clean coal technology. If we do not see it, we will not be able to have that technology on stream, and as a result we will meet the energy crisis much earlier than we will be able to have nuclear power stations on stream. Therefore it is important to concentrate our efforts on getting clean coal technology up and running. Has my right hon. Friend had meetings with the Energy Commissioner, and if so, what has been the outcome?

I am tempted to say that the European Commission would say that, wouldn’t it? The United Kingdom is willing to play its full role, but other countries in the European Union should, too. I am not aware of any EU country other than the UK that has made a commitment to funding a CCS project. My hon. Friend asks whether we can support up to four projects. I do not think that that is possible. We believe that we can fund one significant-scale demonstration project. I still believe that, having chosen this particular path of post-combustion coal and of running a competitive process which, if we had taken the advice of the Conservative party, we could not have run, the United Kingdom has the opportunity of being a world leader in this important technology. It can bring significant growth to UK manufacturing companies and engineering consultancies. We are being responsible. We are committing public money, so there will always be a limit—the Conservatives may have forgotten that—to the amount the public can afford to put into such technologies.