Oral Answers to Questions

Debate between Charles Hendry and Ian Swales

Thursday 17th May 2012 Commons Chamber

[Charles Hendry]

As the hon. Gentleman will be aware, decisions on energy infrastructure matters for Wales are made on a nationwide basis. We know that that is what the industry looks for. But of course, in that process there has to be local authority planning consent for the specific project. There has to be approval by the Environment Agency and its equivalents in Wales and Scotland, if the project is taking place there, and by the Health and Safety Executive. All the appropriate bodies are involved in that process.

[Ian Swales (Redcar) (LD)]

I welcome the current carbon capture and storage competition. As the Tees Valley has 18 of the top 30 UK carbon emitters, I am sure the Minister will agree that its bid has a lot to commend it. Will he ensure that the needs of heavy industry are given due weight alongside the needs of energy generators?

Renewable Energy

Debate between Charles Hendry and Ian Swales

Wednesday 29th February 2012 Westminster Hall

[Charles Hendry]

My hon. Friend is aware that what we have been seeking to do is to give local authorities more say in how they should manage their affairs, rather than a top-down, Government approach. For many of us with landfill or land-raise issues in our constituencies, it seems absurd to put food waste into such facilities. At the end of the day, however, we want the local authorities to be the driving force in resolving such issues. In his own case, Kent is a beacon authority in looking at how to manage its waste issues.

[Ian Swales]

I thank the Minister for investing DECC money into an anaerobic digestion facility at the Centre for Process Innovation in my constituency. He is referring a lot to renewable energy, but does the way in which waste is treated under all our policies throughout the various Departments satisfy the renewable energy criteria and meet the simplicity requirements mentioned by my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes)?

[Charles Hendry]

My hon. Friend raises an important issue. For the first time, we are now moving towards a clear, cross-Department strategy on waste. That means looking at the hierarchy and at where we reuse and recycle, but also seeing that as part of that process there is residual waste, and getting an energy source from that is better than putting it into landfill and land raise.

Carbon Capture and Storage (Scotland)

Debate between Charles Hendry and Ian Swales

Tuesday 17th January 2012 Westminster Hall

[Charles Hendry]

My concern was always that the competition was too narrowly focused. Given the requirement for post-combustion technology, the interest in pre-combustion technologies, such as the BP project at Peterhead, could not qualify. The assumption at the time was that the technology could then be sold to China and elsewhere to retrofit old plants, but the Chinese are now clearly quickly developing their own technology that they want to sell to the rest of the world, so we need to look at a wider range of technologies. An added complication, which I will come to later, is retrofitting an old technology to an old plant, with the significant extra costs inevitably occurred in bringing that plant up to scratch, to give it decades of future life, on top of the cost of the CCS alone.

We all agree that CCS can play a fundamental part in delivering our secure, low-carbon energy needs. It provides us with a generation option that other technologies do not: its flexibility can provide a balance between the intermittency associated with renewables and the base-load nature of nuclear. It allows fossil fuels to play a full part in our low-carbon future and allows the decarbonisation of industrial emissions. We—the whole of the United Kingdom and the Government—remain firmly committed to working with industry to achieve that.

We have made available £1 billion of capital funding to support early CCS projects, and I will say more on that in a moment, in response to the questions. We are establishing a market for CCS electricity through our reforms to the electricity market. We are continuing to lead the world in putting in place the regulatory framework to support CCS, including legislation on third-party access to pipelines. We are supporting essential research and development, including opening the UK’s first carbon capture demo at the Ferrybridge power station. We have also established the CCS development forum, which has drawn together around 40 members from the industry to be directly involved in delivering CCS in the United Kingdom, together with representatives from the international academic and non-governmental organisation communities.

There are many different ways to achieve the decarbonisation of the power sector. At this stage, it is not possible to predict which will be the most cost-effective route or what exactly the power sector will look like in 2030. Nevertheless, we can use economic models to produce projections, using the best evidence currently available. Analysis undertaken for the carbon plan of the Department of Energy and Climate Change suggests that around 40 to 70 GW of new low-carbon electricity generating capacity will be needed by 2030, depending on demand and the mix of generation built. In response to the point made by the hon. Member for Banff and Buchan (Dr Whiteford), a strong continuing role for gas is envisaged in that mix.

[Ian Swales]

The Minister mentioned economic modelling. Do the Government have any wider modelling that takes into account the whole picture, not only carbon capture and the grants that might be required to get it going, but—my earlier point—petroleum revenue tax resulting from enhanced oil recovery?

[Charles Hendry]

My hon. Friend makes an interesting and valuable point. Our focus so far has been on how to advance the technology and to make it commercially viable and on how to bring down the cost. Our focus therefore has been on the energy sector, but he is absolutely right about a range of other benefits, not least in PRT or revenue that might come through enhanced oil recovery, which I will come back to, as well the supply-chain opportunities, the wealth that that creates for the economy and the tax revenues that will come into play.

Our analysis shows that CCS could contribute 10 GW of capacity to the UK electricity market by 2030 and up to 40 GW by 2050. I want to be absolutely clear that we are not setting targets for separate technologies. The industry’s ambition for CCS, as set out by the Carbon Capture and Storage Association strategy paper last year, is significantly higher than in our modelling, seeking 20 to 30 GW by 2030. We would be happy with such deployment, provided that it is the most cost-effective way to meet our decarbonisation targets—an issue raised by my hon. Friend the Member for Warrington South (David Mowat). We must do three things to make that possible: provide incentives for investment, bring down the costs of the technology and tackle barriers to deployment.

The key to delivering the investment that we need in the UK electricity sector is confidence, for both technology developers and investors in the long-term future for their technology, and in the certainty of opportunity for those who want to take forward CCS and other low-carbon technologies. That is why the Government are implementing the biggest reforms to the electricity market for a generation, to provide the certainty that investors require and to create an industry for CCS, rather than only a few pilot projects. We are committed to reforming the electricity market to incentivise the deployment of low-carbon generating capacity.

Electricity market reform is a game changer for CCS. The reforms that we have announced offer the prospect of a future market for CCS electricity that will drive investment in commercial CCS plants. We are considering reforms that offer a range of benefits: longer-term contracts to provide stable financial incentives; support for early CCS projects, with contracts designed to recognise the associated uncertainties; an emissions performance standard set at the equivalent of 450 grams of carbon dioxide per kWh; and a carbon price floor that will further incentivise investment in low-carbon generation. With such incentives in place, the deployment rate for CCS will be dependent on the costs of the technology and how they stack up against nuclear and renewables.

If CCS is to be competitive with other low-carbon technologies, we and the industry must work together to understand the costs and how they can be reduced. There are two elements: technical discovery, through both research and development and learning by doing, and reducing the perceived risk of investing in a new technology, which leads to higher premiums for investment. We are tackling these issues in two main ways: through our £125 million research and development programme, which will continue to provide support for projects such as the UK’s first carbon capture pilot at Ferrybridge, which was opened by the Secretary of State for Energy and Climate Change last year; and through our new CCS delivery programme, which will support larger-scale projects, delivering learning by doing, moving the technology forward and reducing risk premiums. The programme will focus on achieving the overall outcome of cost-competitive, low-carbon electricity from fossil fuel power stations in the 2020s, thus achieving exactly what we want, which is a long-term industry in the sector.

National Policy Statements

Debate between Charles Hendry and Ian Swales

Wednesday 1st December 2010 Commons Chamber

[Charles Hendry]

The Government are committed to taking us forward, and I welcome my hon. Friend’s support in that respect. Hydro has an important contribution to make. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), who has responsibility for climate change, set out how we can hope to achieve that ambition in his recent speech on the subject. Most issues that we are discussing today relate to major applications of more than 50 MW. Most hydro schemes will fall below that threshold and will therefore be subject to local planning decisions.

The section of the energy policy statement that deals with renewable energy does not cover major hydro schemes, such as major schemes involving tidal flow, because at this stage there is no evidence of a serious application for such a scheme of more than 50 MW. If that happens, we will need either to review the national policy statement or to introduce one specifically for marine technologies. In this country, we have a network of rivers, which are a potential source for electricity generation that we are keen to see harnessed.

[Ian Swales (Redcar) (LD)]

The Minister has discussed the urgent need for new renewable electricity generation capacity. If that is the case, why is the banding review of renewables not reporting until August 2012 with implementation in March 2013? Will he consider speeding up that process, so that we can get the capital that is waiting for, for example, biomass power stations released and get such projects under way?

[Charles Hendry]

One of the issues for investors in this area is certainty. They want to be able to plan for the long term and to know what rate of support they will get under whatever mechanism is in place. A date of 2013 enables people to plan a transition to whatever the banded level will be after that. I understand the need for early clarity, and if there are ways we can provide that, we shall seek to do so. We seek to work constructively because we understand that the alternative can be a hiatus in investment, with investment dropping off for a period of years in advance of the threshold and the level of support changing. It is important, in terms of national interest, to have a continuous flow of investment.

I turn now to the issues that have been covered in the energy national policy statements. Perhaps it would be helpful if I briefly set out the purpose of the documents before us today. The revised draft energy national policy statements consist of a suite of six national policy statements and a number of associated documents. They are not intended to set out new energy policy. They are consistent with and explain current energy policy and how it relates to the planning consent process. Similarly, we are not using national policy statements to change the standard for consenting projects. They neither raise nor lower the bar on how a major energy infrastructure project is examined and consented. They are there to explain how such decisions should be made. They set out the consenting policies that need to be considered in the examination of major energy infrastructure and the decision on whether to grant or decline consent. At the same time, they will ensure that new major energy infrastructure projects respect the principles of sustainable development. They will allow not only the Infrastructure Planning Commission but developers and local residents to see the basis on which applications must be considered.

There is an overarching energy national policy statement that sets out the Government’s policy on energy and energy infrastructure development; an energy need statement on the need for new nationally significant energy infrastructure projects; the assessment principles that need to be taken into account in examining and deciding on proposals for energy infrastructure development; and generic impacts for all energy infrastructure, and how they should be assessed and mitigated to ensure that the right balance is reached between securing our energy needs and protecting the environment.

There are also five technology-specific energy national policy statements, covering fossil fuel electricity generation; renewable energy infrastructure, which deals with onshore wind, offshore wind and energy from biomass and/or waste; gas supply infrastructure and gas and oil pipelines; electricity networks infrastructure; and nuclear power generation.

Oral Answers to Questions

Debate between Charles Hendry and Ian Swales

Thursday 11th November 2010 Commons Chamber

[Charles Hendry]

The hon. Gentleman knows a huge amount about these issues. We are consulting on a floor price for carbon, which we believe is essential, and also on other mechanisms that might be necessary to secure investment in low-carbon technologies. We will consult on capacity payments in terms of back-up generation capacity and on other ways of managing demand, which we think is a more efficient way to deal with that problem.

[Ian Swales (Redcar) (LD)]

9. If he will take steps to ensure that the renewable heat incentive does not make UK energy-intensive industries internationally uncompetitive.