Revised Draft Overarching National Policy Statement for Energy (EN-1)
(Limited Text - Ministerial Extracts only)
Read Full debate
Lord Jenkin of Roding
My Lords, I must begin by declaring a couple of interests. I am the honorary president of the National Skills Academy for Nuclear and the honorary president of the Energy Industries Council. Like the right reverend Prelate, I thank the Minister and the Government for the extent to which they have taken on board the discussions that we had at the earlier stage. The revisions make considerable improvements to the national policy statements. I single out in particular national need. Originally it was referred to as being merely “significant”. As my noble friend will perhaps realise, I tabled an amendment to say that it should be “of critical importance”. The statement has not gone quite as far as that, but the fact that the need is now referred to as being “urgent” makes the point perhaps more simply and is a considerable improvement.
I also applaud the acknowledgement in the statements that we need to look beyond 2025. We have all recognised the importance of the Pathways 2050 paper which the department produced last year. A number of points in these documents reflect that work and I shall return to them in a moment.
I also welcome the proposal to extend CCS beyond just coal. I recognise that CCS for coal is the most important because coal is the greatest pollutant, but the policy statements now recognise that any generating capacity over 300 megawatts should include gas as well as coal. Given that the market in gas is huge, such a move is very valuable. I also welcome the details that have been given in response to both Houses of Parliament on the technical and economic feasibility both of carbon capture and storage and carbon-capture readiness. I shall return to that later, because it raises a few questions.
It is right to mention one or two points which were raised during the consultation with interested organisations but which, so far as I can see, are not reflected in the revised drafts. I am an officer of the All-Party Oil and Gas Group and I have had my attention drawn by Oil & Gas UK to a couple of points. It had argued that there should be an explicit obligation on the IPC or its successor to consider prior established rights for, for example, offshore applications when they have to determine applications under the policy statements. It was disappointed that there was no statement to that effect in the key principles which are in paragraph 4.1.3. Perhaps the Minister could comment on that.
Then, there is a related concern that if there is a conflict between, for instance, offshore oil and gas and the requirements of offshore wind power, the national policy statements do not really represent the scale and complexity and safety requirements of offshore oil and gas activities in the UK’s continental shelf. Too many of the provisions, it will argue, are somewhat woolly and imprecise and leave the resolution of difficulties between offshore wind power and oil and gas simply to be settled by the commercial companies involved. Given the role of DECC in both these matters it would seem to me that there is a case for arguing that there needs to be rather more guidance on this from the department. These are just a couple of points where there is a little disappointment.
I think that we should look at the context—indeed, all the previous speakers have done this—in which we are considering these revised national policy statements. My noble friend mentioned the planning reforms. Like others, I applaud the decision to transfer decision-making from the IPC to Ministers. I would like to say that it would be right to applaud the decision of Sir Michael Pitt, the chairman of the IPC, and of all the members of the commission to agree to work within the new system when the IPC’s functions will be dealt with by the major infrastructure planning unit within the Planning Inspectorate. I have to say that before the election I attached enormous importance to that in my discussions with my colleagues, and it has been achieved. I think that that is wholly admirable.
However, there are certain other planning developments still to come. We are told that there is to be a national planning policy framework and some rationalisation of the planning policy statements—both of which are no doubt very desirable—and everybody agrees that it is vital to build the confidence of investors, particularly for the major energy investments, if these things are to happen. To do that one needs to reduce uncertainty and achieve policy stability. Therefore I ask two things of my noble friend. First, what undertaking can he give to designate these new revised national policy statements as soon as possible after the consultations have been completed? Secondly, given that there are going to be these further developments coming along later, could he ensure that the national policy statements should stand as clear guidance and should slot unscathed into the revised suite of policies and the guidance as they are developed? That is a point that has been put to me and I entirely support it. As has been said, there is to be huge energy investment over the next 10 to 15 years and anything that can achieve certainty on this is to be welcomed.
Can my noble friend tell me something about the future timetable on this? I have been assured by the usual channels that we could, if we wished, repeat last year’s processes and table resolutions that could be debated on the Floor of the House, and that would, in theory, be divisible. I am not sure whether that will be necessary on this occasion as most of these national policy statements will attract wide agreement. I have been told that this will happen in the other place and that there will be a vote on a Motion from the Government to approve the national policy statements. Can my noble friend say whether anything like that is likely to happen in this House?
A few moments ago I referred to the 2025 span for the national policy statements and the 2050 figure in the pathways paper. Perhaps I may draw attention to what was said about that in paragraph 3.3.16 of the overarching statement, which states:
“The Government has therefore considered a planning horizon of 2025 for the energy NPSs in general and for EN-6 in particular, as an interim milestone”.
It is important to notice that phrase. The following paragraph states:
“The Government will keep the relevance of this interim milestone of 2025 for the energy NPSs under review”.
The question that I should like to put to my noble friend is: how will that be done; and when does he anticipate that it will be appropriate to extend the review either in new national policy statements, as he suggested, or in some form of amendment? I will refer to this again on Thursday, because it is particularly important in the consideration of nuclear investment and the need for nuclear sites. I will not dwell on that today, and I hope that the right reverend Prelate will forgive me for that.
I return to the policy statements we are considering today. There are a great many issues to which I am sure noble Lords in all parts of the Grand Committee will wish to refer. I should like to pick out the question of gas infrastructure. I refer to the figures that have been quoted at paragraph 3.8.4 and are the subject of figure 3.1, which makes it clear that there will have to be considerable use of gas over the foreseeable future if we are going to have intermittent renewable energy and sufficient overall energy to keep the lights on. All I can say is that that is a welcome realism. It has not always been apparent in some of the public statements that have been made, but it is only realistic. There are ample supplies of gas. It is much more easily adjustable to the changing patterns of demand and we are inevitably going to use it. Gas will remain a significant source.
However, it is also made clear in the paragraphs that there are uncertainties. In particular the document mentions energy prices. In this context, I was mildly surprised that there is no reference to the comparatively recent advent, especially in the United States, of shale gas. This was mentioned in a briefing sent to a number of us last November by the department. It stated:
“Additional supplies in the US may now have a limited impact on international gas markets (since it is now largely self-sufficient), unless the US were able to export some of this gas”.
I read an article the other day which indicated that although it is true that current plans to convert some of the LNG terminals in the United States to export terminals have for the time being been set aside, the fact of the matter is that the US is now producing shale gas at considerably below the world market gas price. There must therefore come a point when there will be an undoubted incentive to try to use some of that on the world markets and therefore to have an impact on prices. That is likely to have an impact on the balance of gas on our markets here and might at some stage require a revision of the figures to which I referred a few moments ago.
As the right reverend Prelate and others have said, gas is of course a fossil fuel and therefore emits greenhouse gases. If it is going to be a larger part of our energy scene, and if that is undesirable, that implies that other sources will have to be expanded to stop that happening. One sees that the obvious answer, as a very low-carbon source, is more nuclear. That is another point that my noble friend might like to mention.
Other speakers have referred to CCS and carbon-capture readiness. I shall refer to two issues related to that. One is the whole question of carbon dioxide transport and storage, and the other is the process by which the IPC or its successor is to decide on approval, or not, of a CCR plant.
On the question of pipelines and storage, there is a requirement on the IPC under paragraph 3.6.5 to take account of further developments of CCS that will require further carbon transport and storage. This seems to be really quite difficult. The industry itself, in paragraph 4.7.7, is asked when planning its investment to bear in mind further developments. I have always felt that eventually there will have to be a CO2 grid, or perhaps a series of regional grids, in the country so that one does not have a mass of single pipelines leading to underground storage offshore. Achieving that objective, though, will be very difficult to deliver in practice. How is the IPC expected to take account of future demand? The four demonstration projects, all of which will be CCS, are intended to establish the viability of CCS as an economic and technical possibility. By definition, no one knows what the future investment is going to be, so I find this a difficult concept. I hope that my noble friend might be able to explain. I realise that a lot of this is spelt out in the revisions to EN-1, but I have not been entirely clear about how they are going to work out.
I come to the more difficult, and more problematical, question of CCR, where a plant can be produced but it has to be established that it is carbon-capture ready, and how the IPC is to handle those applications. This will be a very difficult problem. One has to remember that this all came via the European Union.
Lord Shutt of Greetland
My Lords, even in the benign atmosphere of the Grand Committee, the noble Lord has had 17 minutes and I am afraid that 15 minutes is the recommended time. I do hope that he will be able to conclude his remarks.
Lord Jenkin of Roding
I can conclude my remarks extremely briefly by saying that I hope that my noble friend will give us some explanation of how the new guidance on CCR is intended to work, and what the remaining role of the IPC will be in that. I am sorry if I have tested the patience of noble Lords on this, but I think that these are relevant points.