Carbon Capture and Storage (Scotland)

Gordon Banks Excerpts

Tuesday 17th January 2012 Westminster Hall

[Thomas Docherty]

I am most grateful to the hon. Lady for making that point. She is entirely correct that this issue is not only about security of supply, although that is the single most important aspect.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Following on from the comments of the hon. Member for East Dunbartonshire (Jo Swinson), does my hon. Friend agree that there is also an economic and industrial factor to carbon capture and storage, and that the decisions taken in Holyrood and Westminster do nothing to create the momentum for the UK to be a leader in carbon capture and storage?

[Thomas Docherty]

Yet again, I find myself in full agreement with my hon. Friend, who, as my neighbouring MP, has taken a close interest in Longannet power station. I hope that he will be able to make further points in the debate shortly. As I was saying, security of supply must be the biggest single priority, but as colleagues have just mentioned there are other issues and I will turn to each of them in due course.

Where do we go from here on the issue of security of supply? We have two choices. We can have a balanced energy policy that has clean coal technology, nuclear power, some renewables and, regrettably, a limited proportion of gas, or we can put all the eggs into one basket, as the SNP has said in its manifesto that it will do. As I said earlier, I hope that the hon. Member for Banff and Buchan (Dr Whiteford) will spell out exactly why we should have 100% windmills and hydro, and how she will achieve that goal during the next decade.

As I have mentioned, a very regrettable decision was taken by the Government on 19 October last year that, for obvious reasons, was very disappointing for my constituents and indeed for the whole of Scotland. That decision was that the Longannet scheme was not going to go ahead. However, there is a recognition that that decision was a pragmatic one and that the Government have a duty to the taxpayer. The problem with carbon capture and storage is that it is an unproven technology. No Government or private company have yet come up with a viable, large-scale carbon capture and storage scheme. I must say that successive Governments have been very late to understand that there comes a point when people have to push back from the metaphorical table and say, “We could throw billions of pounds of taxpayers’ money at something and we still have no guarantee that that is going to work”.

Regrettably, successive Labour and Conservative Governments have had a very poor track record of backing winners when it comes to new technologies and there is a genuine debate about whether Governments should try to back winners or whether they have a duty simply to put in place a market for private companies to come up with winners. Perhaps the Minister will be able to say more about the Government’s thinking on that issue.

I make no criticism of Iberdrola or of Ministers for the decision that they ultimately made. Building on the excellent work of the Leader of the Opposition, my right hon. Friend the Member for Doncaster North (Edward Miliband), when he was Secretary of State for Energy and Climate Change, the current UK Government offered a £1 billion fund for carbon capture and storage. The only observation that I would make—as I say, it is not particularly a criticism but more a general observation—is that many colleagues misunderstood the nature of the competition. The competition was not a case of “last man standing wins the prize”; it was a marathon, and to qualify for the funding one had to reach the finish line. Regrettably, but for obvious reasons because Longannet was the last entrant in the competition, there was an assumption that it would receive the £1 billion. The UK Government and Iberdrola, the Spanish energy giant that owns Longannet, were clearly in the region of £500 million apart on the start-up and ongoing costs of Longannet. That is regrettable, particularly for my constituents, but I do not think this was doable for the UK Government.

What was bizarre was the intervention by our blustering First Minister, who outrageously leaked the confidential commercial information to a Scottish newspaper, showing, again, that he really is not a grown-up. Also, while he was pandering to the galleries and attacking the UK Government, I noticed from answers I received from UK Ministers that he did not offer a single penny of Scottish Government money to fill the gap. If the First Minister had been prepared to offer £500 million, we could have taken Longannet forward but, as ever with the SNP, all we get is bluster, grudge and grievance, with no solution. Perhaps when she speaks, the hon. Member for Banff and Buchan will spell out what the SNP Government would have done, because all they have done is their usual trick of having a pop at someone else and not offering any solutions.

As the hon. Member for East Dunbartonshire (Jo Swinson) said, there are some genuine issues here about not just security of supply, but the environment. I firmly believe that carbon capture and storage is a technology worth pursuing, and my preference remains for a coal station for the simple reason I have spelt out already: that I would be reluctant to go down the route of investing in a gas technology over the next 30 years, because gas is not an indigenous supply. I recognise that there is a strong case for Peterhead, which has been championed by my hon. Friends the Members for Aberdeen South (Dame Anne Begg) and Rutherglen and Hamilton West (Tom Greatrex). I hope the Minister will be able to outline in some detail where we are with that.

[Thomas Docherty]

I am most grateful for my hon. Friend’s observations. She is indeed correct. There have been some positive signs. My note of caution, however, is that there is a danger that we will go down the route of that classic British tradition, whereby Europe and the United States pursue one path and the UK does its own thing. One need only look back at the nuclear programme. While the rest of the western world was going down the water reactor route, the British, in our own quaint way, went down the gas reactor route, meaning that we had wonderful technology—what I would call the Betamax technology of nuclear power stations—but technology that was not compatible with anyone else’s.

[Gordon Banks]

I will certainly not make any comments about Betamax or VHS. Does my hon. Friend not agree that, given the number of coal-fired power stations in the UK and the world, and the number of new ones coming on line in the developing world, the holy grail is carbon capture and storage for such stations? If we do not get our skates on, we will be left behind, economically and industrially, and will have to watch others develop the technology and create jobs in their economies, while having to import the technology and ability ourselves.

[Thomas Docherty]

My hon. Friend is exactly right. That is the holy grail. I am not sure if that makes my hon. Friend the Member for Rutherglen and Hamilton West the Sean Connery or the Indiana Jones of the analogy, but it is the holy grail that we should be pursuing, and it can be achieved. My point about Betamax is that it was a fine piece of technology, and our advanced gas-cooled reactors in particular were, and still are, superb engineering kit. I see that the SNP is now a convert to the case for AGRs, championing Hunterston and Torness having life extensions in the years ahead, but when the rest of the world is going down the VHS road, it is slightly disturbing to think that we are going to pursue gas at the expense of coal. Coal is the long-term priority, and there is a significant market, if we can get the technology to work: we can export it not just to developing countries, although that would be a big market, but to many western and European countries that are also very coal reliant.

I should perhaps say a little about the technology itself, and its benefits for Scotland. As Members are undoubtedly aware, the trick with the technology is not just to capture the carbon but to store it. The Peterhead scheme is, as I understand it, very similar to that for Longannet, in that it would seek to push the captured carbon up into the North sea, into land owned by the Crown Estate. It is important to recognise the Crown Estate’s role, and perhaps the Minister can outline how that will work. Reuse of the now extinguished gas and oil fields off our UK shores is also provided for. Interestingly, the Longannet scheme was a tri-party approach, involving National Grid, Iberdrola and one of the largest oil and gas companies, which had an extinguished field. I hope the Minister can say more about how he will encourage the private sector to do more such partnership work.

It is worth saying that no short-term danger is posed to the Longannet power station by the current carbon capture and storage project not getting the go-ahead. The lights will not be turned off at the station tomorrow morning, but there is a question about its medium-term future. There is a genuine debate to be had about whether it would be the right decision to build another coal power station, whether Iberdrola should be encouraged to seek a further life extension, and if so what Government support could be offered, or whether, as at Cockenzie in East Lothian, a decision is made to shift the type of fuel. Whatever the options, I sincerely hope that the UK Government will do all they can to offer genuine support to Iberdrola as it seeks to take this forward, and I would be grateful if the Minister found time—for either himself or his colleague Lord Marland, who has, to be fair, been a big supporter of CCS—to meet with me. Whatever decision is made about Longannet, I hope, ultimately, that when we get successful CCS we can either retrofit the station or, if we do persuade Iberdrola to go for a new build, that we can get it included. For the benefit of my constituents, I would be grateful if the Minister spelt out what support the Government will be able to give to any new build fossil fuel plant that might be needed to keep the lights on.

I am conscious that other Members wish to speak, so I will draw my speech to a close.

--- Later in debate ---

[Gordon Banks (Ochil and South Perthshire) (Lab)]

I congratulate my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) on securing this debate, which is extremely important to Fife and central Scotland, as well as to the UK in general. I am disappointed with the Longannet decision. It affects my constituency, which borders that of my hon. Friend more or less at Longannet, very much. Many of my constituents work at Longannet and I would have had high hopes of many more of them finding employment in a successful carbon and capture storage plant there, but we are where we are.

It is vital that we have a balanced energy policy. We have to embrace renewables of all natures and there has to be a role for fossil fuels and, indeed, nuclear. We have to have a guarantee that, when we press the light switch, the light comes on. Unless we embrace all available technologies to ensure that that happens, we will find ourselves socially and economically challenged.

We need to determine—we can only do this through full-scale trials—whether carbon capture and storage is a real option for future economic prosperity, as well as for dealing with the knock-on environmental issues, which are the driving factor. It is equally important to determine what a successful CCS programme—developed and branded in the UK—could deliver to the UK economy in terms of revenue and the skills of our constituents.

The Scottish Government did not do anything in relation to the Longannet decision. There was a lot of hot air from the First Minister, and it is hot air that we are trying to stop. It would have been much more constructive for the Scottish Government to have done something to facilitate the development of Longannet. Did the Minister have any discussions of that nature with the First Minister?

In an intervention, I made the point that, with coal-fired power stations in the UK and throughout the world—an increasing number are coming online in countries such as China—CCS is the real gain and the holy grail. We need to focus our minds on it in the UK, while bearing it in mind that both the public and private sectors have limited resources to invest. I will come to that in a moment.

Can the Minister confirm the expected release date of the CCS roadmap, because that is absolutely vital for the private sector embracing the challenge of this technology and seeing the Government as a partner in this? Unless the Government play their part, we cannot expect the private sector to play its part. That in itself will create jobs, technology and developmental skills that I hope we can build on and in some way export. CCS could create 13,000 jobs in Scotland and 14,000 jobs elsewhere in the UK. By 2025, the sector could be worth more than £10 billion a year to the economy, which, in addition to the environmental impact, makes CCS a bit of a no-brainer. We have touched on how many times we have been left behind.

[Ian Swales]

Does the hon. Gentleman agree that, if CCS is worth £10 billion to the economy, those who will benefit have an incentive to help to get things going? It does not seem to make sense to rely only on Government funding.

[Gordon Banks]

The hon. Gentleman is perfectly correct, but what the private sector needs is for the Government to show a willing lead. What happened at Longannet could be construed as not demonstrating that. The Government need to step up to the plate here and throw the gauntlet down to the private sector.

As I was saying, how many times have we been left behind and missed the boat in the UK in terms of various different technologies? The hon. Member for Redcar (Ian Swales) talked about wind technology. It is a crying shame that we are where we are with wind technology. We are largely importing the technology and the equipment to build turbines. That really has been a missed opportunity. Although CCS may be costly—I will come back to that matter—it is an opportunity we cannot afford to miss.

We need something from the Government to show that they are embracing CCS and that demonstrates to the private sector how serious they are. The hon. Member for Warrington South (David Mowat) raised the point about CCS being expensive. Yes, it is. There are no cheap or quick fixes to our energy position, but we have to consider what the fixes are and CCS is potentially one of them. Governments in Holyrood and Westminster need to step up to the plate, and I am not sure they are doing that.

[Thomas Docherty]

Does my hon. Friend have any views on what Governments can do in terms of the planning system, because it strikes me that one of the great challenges we face, particularly given the long lead-in time on a new-build plant, is ensuring that that type of decision is not held up unnecessarily through the planning process?

--- Later in debate ---

[Gordon Banks]

My hon. Friend makes a valuable point. We must determine what becomes a priority in the United Kingdom and ensure that people’s lives are not blighted by decisions that are trying to make things better. There is a real need to recognise that we must have security on a core range of issues, one of which is energy. I embrace the possibility of ensuring that future CCS opportunities and, indeed, new build with carbon capture get the relevant scrutiny and are of benefit to the UK, Scotland and the immediate community. Future CCS opportunities need to be fully valued and evaluated in that process.

In conclusion, the Longannet decision was extremely disappointing. It did not send the right message to the energy sector or to the people working in it. Today, the Minister has an opportunity to try to undo some of that damage and I look forward to his comments with bated breath. I hope that he will take that opportunity on board.

--- Later in debate ---

[David Mowat]

I do not, no. If this technology is to work, it has to be done on the same playing field as everything else. I mentioned the price of carbon. The other thing about CCS technology that is not in doubt is that it requires an injection of power over and above what a power station is currently using—in the order of 25% for coal. That is an immediate increase in emissions and everything else just to make CCS work.

[Gordon Banks]

I want to press the hon. Gentleman and ask him whether he is advocating that the Government should not be spending this £1 billion.

--- Later in debate ---

[Charles Hendry]

The hon. Lady makes exactly the point that I am keen to focus on: there are investors who might want to come into the project—international investors who want to be part of the early development of this game-changing technology because of its global potential. We are encouraging them to try to talk to other potential investors, and we are looking at a range of projects. We are discussing one that could come through the new competition, but it is not the only one. Other projects are viable and would have greater scope for accessing the new entrant reserve fund, but until we have seen their scope and the collaboration and co-operation between different industrial players, it is hard to come to a final decision. However, I give the hon. Lady the commitment that we have a real desire to take the competition forward much more rapidly than the previous competition, and during the next few weeks, we will provide the details.

We had an industry day in December, and during the next month we will have a further industry day to provide more detail on how the competition will work. We will then open up the competition shortly afterwards with a tight time scale to encourage firms to come back. Having lost time, we want to make up for that and to see the full range of projects that can benefit from funding and find out how we can take that forward.

[Gordon Banks]

While the Minister is winding up, will he respond to a point that I made that fits in with the one that he is making about new competition and external funding? What discussions has he had with the Scottish Government about them playing a financial role? Did the First Minister approach the Minister’s Department on Longannet or any future projects?

[Charles Hendry]

I was not remotely close to winding up until I took so many interventions, but I must now do so swiftly. On Longannet, the Scottish Government did not offer funding but, to be fair, they were not asked for funding. The project is seen to be a UK energy policy with funding from the UK Exchequer. We had constructive discussions with the Scottish Government ahead of it. I think that we all share the disappointment at the reaction, and perhaps the lesson is not to announce decisions just before the Scottish National party’s annual conference. We must try to move forward in a way that takes such issues out of politics. The gain from what can be achieved to the United Kingdom is so substantial that we all need to pull together and to work together.

The hon. Gentleman said that the decision on Longannet did not send out the right message, but it was the only decision we could have made, because at the end of the day there was so much difference between what it was going to cost and what was available. We want to take the technology forward, but we cannot do so at any price. Even if funding had been available from the Scottish Government, it could not have made up the difference to enable the project to go ahead.

Much more work needs to be done, and we are taking it forward urgently on regulatory reform, storage, the supply chain, transport and storage infrastructure and planning. In England, we can certainly make it clear through national policy statements and the infrastructure planning commission that that process will work much more smoothly and without the time delays about which people have expressed concern, although planning in Scotland is a matter for the Scottish Government. More details will come forward very shortly—