Coal-burning Power Stations

Charles Hendry Excerpts

Wednesday 13th October 2010 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

It is a continuing pleasure to serve under your chairmanship this afternoon, Mr Bayley, in the second of our two energy debates. It is a bit like a lotto double rollover, with many colleagues having the chance to speak about the wide range of energy issues that face us. A common theme runs through the debates, which is the need to decarbonise our electricity supply system, both in the roll-out of renewables and how we decarbonise the mass generation facilities that we have in this country.

Undoubtedly, coal is one of the most important elements within our energy supply system. In general, it produces about a quarter of our electricity. When I visited National Grid a couple of years ago, I found that more than half the electricity being generated was coming from coal plants. There is no doubting the significance of the contribution that coal makes to our energy security. Nevertheless, we must still recognise that coal is much the most polluting form of electricity generation. For example, a coal-fired plant produces about twice as much carbon dioxide per unit of output compared to a gas-fired power station.

Looking forward, I think that it is not a question of whether it is coal, gas, nuclear or renewables that we use; to ensure our energy security, we need to have some of all of those. But nuclear will take 10 years to build, coal with carbon capture is 10 years away as a commercially viable facility and some of the massive roll-out of marine technologies is also 10 years away. In the meantime, therefore, we will certainly need to have more gas in the system and that is why we are also taking urgent action to guarantee that we have the supplies necessary at a time when we are becoming more dependent on imports.

I congratulate my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing this debate and on his customary enthusiasm for everything that goes on in his constituency. In his excellent introduction he identified the key issue—the large combustion plant directive. That directive will require about one third of our coal plant to close down if it has not been fitted with flue gas desulphurisation, or FGD, facilities.

My hon. Friend the Member for Selby and Ainsty (Nigel Adams) will have seen at Drax the scale of the investment necessary for a FGD unit to be attached to a power station. Such a unit covers essentially the same ground area as the original coal-fired power station itself and it costs hundreds of millions of pounds to build. Consequently the companies involved have taken very careful decisions about whether the long-term potential of that plant justifies that investment. However, this is a matter for those companies and at the end of their deliberations they will decide whether they can give that type of plant a new life or whether they will simply have to allow it to use its remaining operating hours and close before 2016.

[Mr Philip Hollobone (Kettering) (Con)]

My hon. Friend refers to the large combustion plant directive. I believe that the capacity crunch will come in around 2017. Is he confident that Her Majesty’s Government will not need to seek a derogation from that directive in order to keep the lights on?

[Charles Hendry]

The evidence that we have is that the crunch, which had looked as if it was coming in around 2017, is now further out. The recession has reduced demand for power by 6% or 7% and demand has not come back up to the levels that it had been at before the recession. So, there is a crunch coming but it will now come towards the end of this decade.

However, that does not mean that we are off the hook, because following the LCPD is the industrial emissions directive, which will deal predominantly with emissions not related to CO_{2 .} That directive will close down much of our remaining coal plant if the measures are not taken to ensure that our plant complies with it.

We have a mountain to climb and it is right that we should look at the range of options available to us, so that we can ensure that we have the generating capacity that will be so central in the future.

My hon. Friend the Member for Shrewsbury and Atcham also raised the issue of biomass. I am well aware of a company that is looking to convert the Ironbridge power station to a biomass facility. I am due to come to Shrewsbury in early December. It may be that I can meet representatives of the company then, or I can meet them in London if that is more convenient. I am very keen to learn more about their plans and to learn about how the use of biomass can provide continuity of output, production and employment at the Ironbridge facility.

We see biomass as having a very significant role to play in the energy sector. It can enhance our security of energy supply, because much of the biomass can come from our own indigenous resources. However, we know that sometimes the biomass comes from other parts of the world and we must be certain that the sources of biomass are indeed sustainable. Biomass is also dispatchable; in other words, it can reflect and respond to the peaks in demand. So, if there is a need for back-up capacity, a biomass plant can ensure that we have the continuing output that will be necessary, just as a coal plant can.

Without doubt, large scale dedicated biomass plants can deliver significant levels of renewable electricity by 2020. The renewable energy strategy, which was published by the previous Government in July 2009, estimated that electricity from biomass, including biogas and wastes, would comprise about 20% of all the renewable power generation that will be needed to meet the renewable energy targets that we as a country face.

We also recognise that electricity from dedicated biomass is cheaper than some other large-scale electricity sources. If the biomass generation needed to meet the renewable energy target were displaced by more expensive technologies, there would of course be an additional cost to consumers and, in all the discussion of these issues, that is a factor that we should rightly bear in mind, as my hon. Friend the Member for Shrewsbury and Atcham also reminded us.

Moreover, in comparison with some other large scale renewables, biomass can generate more long-term jobs relative to the megawatt-hours of energy output. That is due to the ongoing need for biomass feedstocks creating business and employment opportunities across the UK supply chain.

Use of biomass also provides an opportunity to enhance the forestry husbandry that we have in the UK. I believe that about 40% of our forests and woodlands are not under active management. So there is extraordinary potential and a massive national resource there, not only in terms of biodiversity but providing a renewable energy fuel that can make a major difference in this sector.

The Government support the generation of biomass electricity through renewable obligation certificates, or ROCs, which are tradeable certificates under the renewables obligation. In July, we announced that the support for dedicated biomass electricity plants under the ROCs would be “grandfathered”. That means that for 20 years the price that they would receive would be guaranteed, up to the 2037 end date of the obligation. I think that that will provide the certainty that investors are looking for.

However, we also recognise that we are receiving more inquiries from generators about the potential of switching to biomass and we acknowledge that we simply do not have enough understanding of the potential of that switch and what it can contribute. So we have called for evidence as part of our consultation on the ongoing work of the renewables obligation. That consultation will close on 19 October and we want everybody who has an interest in this issue to respond—I certainly hope that E.ON will contribute—so that we can understand the full range of interests and ensure that we can put a system in place that will encourage us to go forward.

[Daniel Kawczynski]

Can my hon. Friend tell me the best way for anyone who wishes to contribute to that consultation to participate in it? Is it just to write to him directly?

[Charles Hendry]

My hon. Friend asks a very apposite question. Anyone who wishes to participate can access the consultation through the Department of Energy and Climate Change website. Alternatively, they can write to me, or to my hon. Friend himself and he can pass any correspondence on to me. They can even write directly to my officials. Whichever way they choose to participate, we will be pleased to have their input and I can give an absolute assurance that it will be taken into account.

My hon. Friend also raised the issue of carbon capture and storage, as did a number of other hon. Friends. I think that CCS is potentially one of the most exciting areas of energy development in the UK. It is an area in which we should be leading the world and in which we are absolutely determined that we will lead the world. CCS can reduce by 90% the CO₂ emissions from a coal plant and we think that it is an area in which we must move forward faster.

In this country, we have the sequestration facilities in the North sea, with the depleted oil and gas fields; we have the skills of people who are used to working in the extremely dangerous and hazardous conditions of the North sea; and we have some of the best university expertise, at Edinburgh, Imperial college, Nottingham and elsewhere, which can be brought to bear to ensure that we take CCS forward. Therefore, we are looking at exactly what needs to be done to make CCS happen.

The coalition agreement was clear that we want to have four power stations—commercial power plants—equipped with CCS, as part of our vision of taking CCS forward. We want there to be a much more rapid development of CCS. [Interruption.]

[Hugh Bayley (in the Chair)]

Order. I regret to tell colleagues that there is a Division in the House, so I have to interrupt the Minister.

I ask all colleagues to get back to Westminster Hall as soon as they possibly can. We will start again as soon as the initiator of the debate, Daniel Kawczynski, and the Minister are back in their seats.

[Charles Hendry]

On a point of order, Mr Bayley. I do not have a huge amount left to say. Would it be appropriate for me to write to colleagues on any remaining points that I have not answered already, if that would be to their convenience?

[Hugh Bayley (in the Chair)]

I can give the Minister two more minutes to conclude, but more than that is impossible.

[Charles Hendry]

We can certainly cover the remaining points in the course of a couple of minutes, because I think that it would be more convenient for colleagues if I deal with those remaining points now. We will be putting in place—

[Zac Goldsmith (Richmond Park) (Con)]

Will my hon. Friend the Minister give way?

[Charles Hendry]

If I may, I will give way for 30 seconds to my hon. Friend, because he knows so much about this subject.

[Zac Goldsmith]

I thank my hon. Friend the Minister for giving way. I will be very brief.

Last week at the Conservative party conference, the Prime Minister, the Chancellor of the Exchequer and the Minister of State at the Cabinet Office, my right hon. Friend the Member for West Dorset (Mr Letwin), who is also the Minister with responsibility for Government policy, all mentioned CCS, which was very good news for anyone interested in this issue or, indeed, in climate change. Is the Minister personally confident that the coalition Government’s commitment on CCS will survive the spending review?

[Charles Hendry]

My hon. Friend tempts me to go into an area that is way above my pay grade and the Chancellor would be deeply annoyed if I set out the response to the spending review now. We have looked at these things very carefully indeed, we have a clear commitment to CCS and we believe that it has a massive contribution to make. We are rolling forward the development of projects 2 to 4, in addition to project 1. We think that that is part of the way forward. We are determined to make this technology work in the UK and I look forward to working with my hon. Friend to achieve that outcome.

Question put and agreed to.