Emissions Performance Standard Regulations 2015

Duke of Montrose Excerpts

Tuesday 17th March 2015 Grand Committee

[Baroness Verma]

My Lords, I am extremely grateful for the general support of the noble Baroness for the regulations. She is right that we did discuss it at great length at various stages of what became the Energy Act and within the Infrastructure Bill—so the debate has been well aired. It is an important backstop measure that complements the wider range of interventions that act to secure and decarbonise our electricity supplies as we work towards a low-carbon future.

The noble Baroness touched on a number of issues and I shall try to go through them—but, as with all things, if I feel when reading Hansard that I have missed something out I undertake to write to her. She asked about the capacity markets and felt that the market had squeezed out gas. We have always made it clear that the capacity markets would be technology neutral and that we needed to make sure that there is competition built in, so that we get best value for the consumer. We project that coal will eventually come off and that we will have far less dependency on it, given that we have the potential for the exploitation of shale and other technologies. We see coal playing less of a role going forward. However, it is important to ensure through the measures we are taking that we do not put such a cost pressure on the consumer and that we have security of supply because it is so necessary for us to demonstrate to the public that the Government have taken all precautions to ensure that the lights stay on. So I think that the noble Baroness was being slightly unfair. The capacity market brought on a lot of different technologies at a cost that was driven by competition, which gives the consumer better value for money.

The noble Baroness also asked us to look at the future of coal. I have just touched on that. Our analysis is very much in league with a lot of other analysis that has been given to us, which suggests that unabated is expected to account for only 1% of total electricity generation in Great Britain by 2025, and will decline even further.

[The Duke of Montrose (Con)]

I thank my noble friend for giving way. Are the Government taking a view on when they think carbon capture and storage will become viable at a reasonable price? There were attempts to put out pilot projects, one of which was Longannet in Scotland, which was found to be an uneconomic proposition. I gather that it is now proposed to close that power station.

[Baroness Verma]

My Lords, my noble friend may be aware of two projects that we are funding—one at Peterhead and one at White Rose. They will become the world’s first commercial-scale gas CCS projects. They are still being developed. If my noble friend will allow, I will give him a fuller response. We are demonstrating that we are leading in the world with CCS. Investing £1 billion shows our seriousness about taking CCS forward.

I shall continue with the questions raised by the noble Baroness, Lady Worthington. She referred to the carbon price floor, saying that there was a projection and a sort of wish list that it would rise. We all know that the EU ETS has to be reformed properly. None of us expected the carbon price to fall as much as it did. However, we are where we are with it. I was at a European Council meeting a couple of weeks ago where there was broad agreement that we needed to look at reforming the EU ETS to make sure that it better reflects its participatory role in ensuring that countries that do not have an extreme tendency to reduce their carbon footprints will be encouraged to do so. There is broad agreement that it has to be reformed. That will play a large part in how we respond to the discussion around the carbon price floor.

Another important point is that we must remain competitive. It has always been key that as a country we should not out-compete ourselves by driving ourselves to reduce carbon emissions at a pace while others use them to be more competitive. We need to reach a fine balance, and it is important that in pushing for reform we ensure that the measures we take, internally and domestically, give great examples for others to follow. That is my response to the noble Baroness.