Ian Lavery
Main Page: Ian Lavery (Labour - Blyth and Ashington)(13 years, 8 months ago)
Commons ChamberThe Government have committed £1 billion to the green investment bank, with additional funding to follow in due course. I am extremely pleased that the Environmental Audit Committee is to examine how the bank might work. Infrastructure banks in other countries—for example, the one in Holland, which was funded with €2 billion of initial capital, but brought in €100 billion of additional finance—can play a critical role, particularly in getting business through the so-called valley of death.
Returning to the technology-specific NPSs, we have revised the fossil fuels policy statement—document No. 2—to clarify the requirements for carbon capture readiness in terms of technical and economic feasibility in line with the request made by the Energy and Climate Change Committee.
On carbon capture and storage, will new applications for gas-fired power stations be treated the same as applications for new coal-fired power stations in that they will have to be carbon capture-ready before they can be accepted at the planning stage?
A new coal plant will have to be equipped with some degree of carbon capture and storage capability—we have made it clear that there will be no role for unabated coal in the future—whereas a new gas plant will have to be carbon capture-ready, because of the much lower levels of emissions associated with modern gas plants. Emissions from the most efficient coal plant are perhaps 750 grams per kWh, whereas the figure for the most sophisticated gas plant is perhaps 350 grams per kWh. Given the significant difference in emission levels, we are looking at requiring CCS to be part of the programme. That is why we have allocated £1 billion, which is more than any Government anywhere in the world have allocated to a single plant. We are keen to take forward the development, but we have also said that as part of the subsequent pilot projects 2 to 4, we are keen to see whether that can be applied to gas.
The Minister said that £1 billion had been invested in the carbon capture and storage programme. There were four initial demonstration plants, the first of which is to be a coal-fired demonstration plant. The contract will be awarded, I believe, in December 2011. Will that not take most of the £1 billion? If so, is he confident that moneys will be available to secure the phase 2, 3 and 4 carbon capture and storage projects?
The hon. Gentleman makes an important point. The £1 billion is specifically and only for that project. As I said, that is more than any Government anywhere in the world have allocated to a single project. The additional plants will be funded either by the levy introduced in the Energy Act 2010, or from general taxation. We are looking at the best way forward in terms of deliverability and the Treasury is examining the issue. The funding of projects 2 to 4 is separate from the funding of project 1, which has the £1 billion available to it.
The revised renewables NPS has taken particular account of comments on biomass sustainability for generating stations using biomass as fuel. We have also revised the text regarding noise from onshore wind farms, which is different from general industrial noise, so a specific assessment methodology is used to take that into account.
The method of assessing noise from a wind farm is described in “The Assessment and Rating of Noise from Wind Farms”, known as ETSU-R-97. The report recommends noise limits that seek to protect the amenity of those living close to wind farms. The recommended noise levels are determined by a combination of absolute noise limits and noise limits relative to the existing background noise levels around the site at different wind speeds.
Policy document 4 relates to gas supply and oil pipelines. We have clarified that the gas supply infrastructure and gas and oil pipelines NPS covers only oil and natural gas pipelines and not CO2 pipelines, which will be an important matter in relation to carbon capture and storage development. We have also added a new section describing the impacts on gas emissions due to the flaring or venting of gas.
Policy paper 5 relates to electricity networks. We have tried to make sure that Government policy on undergrounding and the need to treat each application case by case is expressed more clearly. I welcome the decision by the Institute of Engineering and Technology to make an authoritative investigation of the costs of undergrounding, particularly in relation to the issues that the hon. Member for Wells (Tessa Munt) has raised, so that we can have a clear fact-based assessment of the different costs involved.
Thank you, Mr Deputy Speaker. I have indicated to you through the usual channels that, if it is your wish, I am more than happy to forgo any concluding remarks so that more people have time to make their contributions.
I welcome this general debate about national policy statements, which is timely and necessary. I thank the Energy and Climate Change Committee for its continuing effort and expertise and, of course, the Committee on Climate Change for its recommendations and analysis. We share much of the Minister’s analysis of the challenges, but that is not surprising because, as I say with some humility, my predecessors laid the groundwork that he is continuing. We are glad to see him and his colleagues taking up the baton with such relish, because they do so at a critical juncture, when delay and dithering would be terminal to investor certainty, UK energy security and our low-carbon future. There is a real need to get on with that work.
On that thought, the shadow Front-Bench team and I—and I am sure the whole House—send our best wishes to the Secretary of State and his team on their negotiations in Cancun. In government, Labour adopted the world’s first legally binding framework to cut emissions, by 80% by 2050, signalling our clear intent and leadership on tackling climate change. My right hon. Friend the Member for Doncaster North (Edward Miliband) played a difficult hand with some great skill and not insignificant personal commitment at Copenhagen when he was Secretary of State, and although the job has not become any easier, we hope that the new Secretary of State will keep the momentum going.
Let us reprise where we are, as laid out in the documents before us. One quarter of the UK’s generating capacity will close by 2018, and as much as 30% will need to be replaced by 2020. Without prompt action we face an electricity generation gap in the next 10 to 15 years as our nuclear and coal-powered stations are retired. World energy demand is rising and often highly politicised; as North sea reserves decline, we are increasingly reliant on imported oil and gas; and, as the Minister says, electricity demand is forecast to double over the next 40 years. That will require rapid decarbonisation of the electricity sector, diversification of the energy sector with a decreasing reliance on fossil fuels and unabated combustion, and an increasing reliance on renewables, low-carbon energy and decentralised energy.
We will also require development of carbon capture and storage and renewables technology for the UK and for international markets. We will need to create sufficient capacity to meet electricity generation needs at all times, and we will need to put the necessary supply chains in place. I will not go over the issue of Sheffield Forgemasters again, as it has been well aired already. We will require the development of smart grid and electricity networks to meet the needs of a reconfigured, smart and diverse electricity infrastructure and, of course, investment in gas infrastructure.
The doubling of the electricity recovery rate over the next 40 years is vital. As was mentioned, the first phase of the four demonstration plants will cost up to £1 billion. Does my hon. Friend agree that it is essential that funding is found from somewhere to fund phases 2, 3 and 4 if we are to meet our electricity requirements over that period?
Yes, I agree entirely. It was wonderful news that after a slight delay to do with the coalition agreement, getting things in order, and some wrangling with the Treasury, we had the announcement that £1 billion would be available—the commitment that the Labour Government had made to the first phase of CCS on a commercial scale. However, it is equally essential that we have phases 2, 3 and 4. I am sure that the Minister is committed to continuing that wrangling with the Treasury to ensure that we find the mechanisms that will allow that to happen, and promptly. We need it for coal, but we also need it for gas. I welcome the in-principle announcements that have been made about phases 2, 3 and 4, but what we are waiting for, as with so much else, is the detail to make it certain.