Carbon Capture and Storage

Ian Lavery Excerpts

Thursday 20th November 2014 Westminster Hall

[Ian Lavery (Wansbeck) (Lab)]

As ever, it is a pleasure to serve under your chairmanship, Mr Walker. This has been an interesting debate, as was the previous one—you missed most of it, but we discussed scientists and whether we agree with different views on energy.

I am from the ultra-modern school of the National Union of Mineworkers. I was a coal miner. I worked on the coal face and I really enjoyed that occupation—that is why I sit on the Energy and Climate Change Committee. I am not a scientist, but I am guided by scientists. That is probably the right way to be. When I was in my heyday cutting coal under the North sea, I was under the impression—it is what people had told me—that coal was the fuel of the future. I believed that then and I still do now—coal is extremely important. I was not bothered then about whether coal was burned with carbon capture and storage, or whether it was burned cleanly. It was my livelihood, and the livelihood of people in my community and in communities up and down the country.

That was the way we dealt with the situation. We opposed nuclear, renewables—every single thing—because coal was what we did. It was our livelihood. But as time went on and scientists explained that the planet was being destroyed by gas emissions from fossil fuels, I began to believe and understand that perhaps they had a point. That was against the grain, of course, but it was politics against the scientists. Now, I think the scientists are probably right, but the political situation is not where I would want it to be.

We have been talking about carbon capture and storage for 30 years. It is what we used to talk about as young men in the pit: “How can we burn coal cleanly? If we can get the technology right and the Government begin to invest in carbon capture and storage or some type of clean-coal technology, perhaps we will have a future and will be here for many years to come.” That was topical and we are still talking about it now. It was 30 years ago.

My hon. Friend the Member for Southampton, Test (Dr Whitehead) has given me a cartoon showing a scientist behind a rostrum in 1990—I think it has “IPCC” written on the rostrum—saying, “So, this climate change thing could be a problem.” The cartoon then shows the same fellow in 1995, five years later, with the same specs and same beard, saying, “Climate change: definitely a problem.” It then shows the same fellow six years later saying, “Yep, we should really be getting on with sorting this out pretty soon.” It then shows him in 2007 saying, “Look, sorry to sound like a broken record here.” It shows him in 2013 saying, “We really have checked and we’re not making this up.” Then it show the same bloke a lot older than he was at the beginning; he was tapping the microphone and saying, “Is this thing on?” I thought that was very amusing. It highlights the fact that we have not taken carbon capture and storage seriously for generations. I have been involved in the matter and have been hoping and praying that it would save the industry I loved so much, was brought up with and miss so much.

The Minister said that Margaret Thatcher did x, y and z. I will not get too political about Margaret Thatcher and the coal industry despite the fact that she absolutely demolished it. However, I remind the Chamber that in 1988 Grimethorpe colliery had a demonstration fluidised bed combustion plant and clean coal technology plant in operation and it was closed because of the finance—£38 million. Look at what we are talking about now—£1 billion for two projects. If that project at Grimethorpe had continued, who knows where we could have been?

We all waited after that for the Longannet complex to come into operation. It took years and years by successive Governments to finalise the details and it was withdrawn at the last moment. We have been there or thereabouts for about 30 years and it is about time we got a move on.

It is interesting listening to scientists. The argument is, “Should we listen to scientists or should we not?” If the Environment, Food and Rural Affairs Committee is discussing mad cow disease, which affects farmers, experts in the field are listened to and I say that with good humour towards my hon. Friend the Member for Blackley and Broughton (Graham Stringer). Of course we are guided by people with knowledge in the field on which the inquiry was focused. We look at a number of things regarding carbon capture and storage, and the contribution that it can make to decarbonisation in the UK.

On the contribution it could make, the Energy and Climate Change Committee estimated that the UK’s decarbonisation power sector will require approximately 18-20 GW of CCS for coal and gas by 2030. The Government’s independent advice from the Committee provided an energy scenario to reach the UK’s 2030 energy decarbonisation target. The power sector currently accounts for around 25% of UK greenhouse gas emissions. The general mix to achieve a carbon intensity of 50-l00 grams/kWh by 2030 suggests that the energy mix that should be in place is in the region of 40% nuclear, 40% renewable, 15% CCS, and around 5% unabated gas-fired generation. With power generation capacity of about 125 GW by 2030, that equates to 18-20 GW of CCS for coal and gas. Is that realistic? My hon. Friend the Member for Southampton, Test mentioned emission level targets: the 100 grams/kWh and the 200 grams/kWh. I think it will be extremely difficult to reach such targets. Perhaps we should look at them and concentrate on them.

Ministers and Members generally say that things are looking far better now because we are getting rid of coal, which has emission levels of roughly 850 grams. Gas has less than roughly 450 grams.

My hon. Friend the Member for Blackley and Broughton mentioned the potential for shale gas. The reality is that we are crying out for shale gas, but we must be careful what we are looking at. If we exploit shale gas and extract as much as has been suggested, we will need carbon capture and storage or we will miss every target that we have set ourselves. That is the reality. Carbon capture and storage is not just for coal; it is for fossil fuels. Shale gas is a fossil fuel and natural gas is a fossil fuel. That is why there is a real need for carbon capture and storage.

The Committee on Climate Change estimated that the power sector will capture a larger amount of CO₂ per year than industry until 2040, when power and industry are projected to capture similar quantities annually. The Committee said that,

“there is a growing role for CCS in industry through the 2020s, which by 2030 reduces emissions by around”

5 million tonnes of CO₂. So a lot of information is being pressed and put forward by the Committee on Climate Change; but I do not agree with all of it, and neither does the Select Committee.

The second issue concerns the potential benefits that the UK could get from the ability to export carbon capture and storage technology and techniques across the world. I have the latest figures in front of me and they suggest a major green-growth opportunity for the UK and:

“If CCS opportunities develop as anticipated, benefits for UK-based firms have been estimated to be between”

£3 billion and £6.5 billion a year by the late 2020s. That is fantastic.

We are living in austere times when young people need employment, skills and apprenticeships. We live in a low-wage economy. Developing carbon capture and storage and using young people, skills, apprenticeships and so on is so important for what we could do to lead the world of carbon capture and storage, and to export those technologies. We should be focusing on that as a priority.

The third issue is the international efforts to mitigate climate change and the role that UK CCS could play in that. CCS is acknowledged to be a crucial transitional technology for climate change mitigation. The UK has a crucial seedbed role to play. We are told that there is a clear danger that other countries will move ahead more rapidly, and that the UK could lose what might be perceived to be a technological advantage in market leadership. I think we have already lost that. We keep saying that we are leaders in this and leaders in that, but we are not particularly leaders in much in terms of energy.

The Select Committee had a fantastic, very informative visit to China only two or three weeks ago. We keep telling the Chinese that we are leaders in carbon capture and storage, but we do not have a plant and they have, and we keep telling them what they should be doing. Last year, we went to Boundary dam in Canada to look at the carbon capture plant that my hon. Friend the Member for Southampton, Test mentioned. We keep telling them that we are leaders, but we do not have anything in place yet and we are not likely to have anything in place in terms of carbon capture and storage until 2020 at the earliest—that is if we get our skates on. Even though we should be leaders, we are not, but we keep telling people that we are, when it is really not true.

The Boundary dam project has been completed; it was estimated to start some time in March this year, although I believe that it started slightly later than that. It is a 110 MW coal power plant with retrofit CCS technology, and the total cost of the project was estimated to be about $1.24 billion, with $240 million from the Federal Government. We were very pleased to see it, because the Committee discussed carbon capture and storage many times without actually seeing a plant with more than two or three bricks. We have been there and done it. We have looked and got advice, and the report, in my view, is exactly what we need.

The Chair of the Committee said that despite the claims that there are many plants globally, there are only 22 projects in the world, and that includes China. Interestingly, we were in China, which burns about 1.3 billion tonnes of coal a year, largely, if not entirely, unabated. The technologies that are being developed there are fantastic. We have seen massive progress in China on renewables and nuclear, and there is a real desire to move away from coal. I think it will be extremely difficult, in the next 50 years even, to get China to convert what they are now burning in coal to other types of alternative energies—to green energy and renewable energy. We were in Beijing, which was unbelievable. You could only see 50 yards ahead of you, Mr Walker—this was a really sunny day, or they said it was sunny; you couldn’t see the sun. Somebody said that the toxins in the air should be measured at about 20 to 50, according to the World Health Organisation, but on the day we were there, they were 500. It was unbelievable, and it was mainly because of the energy and power being generated in the area.

We have a huge role to play, and although we keep saying we are market leaders, we need to be market leaders. It is so important that we get on with it and develop what we said we would almost 30 years ago. There are a few barriers, and a few key players have suggested that they might be interested in moving into the market, apart from the two big projects that have been set up. However, the four key issues for potential investors in CCS projects are the operating costs, the contractual terms and the involvement of contracts for difference, the storage performance risk and the CCS development timelines, which I have already mentioned.

We have to get on with it. We have to make sure that when we say we are the leaders, we actually are the leaders in carbon capture and storage. It is not just for the coal industry; it is for the gas industry, too, whether that is natural gas or shale gas. We and the European Union have set ourselves some very harsh emission-level targets for the future, for 2020, 2030 and 2050, but we cannot achieve any of those targets unless we have carbon capture and storage up and running in this country.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship here, Mr Walker, just as it is in other forums of the House. I am grateful for the opportunity to follow the contributions from members of the Select Committee to this interesting debate. The Committee’s report was timely, coming as it did alongside further interest from the Government in some of the other documents that others have touched on, including the Government’s scoping document.

I was here for most of the previous debate, although I missed the opening comments from the Chair of the Select Committee—whatever state of dress he was in. The right hon. Member for Hitchin and Harpenden (Mr Lilley) also spoke, but he is not here now. Although I have not read the full 1,000 page report, I have read some of the summary documents that were referred to. I do not think that those documents were seeking to mislead anyone in making clear the importance of carbon capture and storage for the future. These debates follow on from each other in quite a relevant way.

I have taken part in most of the debates on carbon capture in this House in the last four or so years, first as a Back Bencher and then as a Front Bencher. My view is that CCS is an absolutely vital technology in our transition to a lower-carbon economy—not just for the generation of power, but in terms of a number of energy-intensive industrial processes.

Some people argue that it may well be possible to generate power in various different ways that mean that carbon capture and storage proves to be too difficult or expensive or becomes something that happens further into the future. However, without carbon capture and storage I do not think that there is any realistic option or alternative for a number of industrial processes to reduce significantly their carbon emissions while continuing to be part of our industrial space and foundation industries for the manufacturing base and other sectors in this country.

It is important that we make sure the focus in the Select Committee’s report on industrial clusters is not lost in this or any other debate about carbon capture and storage, because it is vital. As I have previously remarked, power can be generated from wind, wave and solar, but no one has yet demonstrated how to manufacture steel from sunshine. That is unlikely to be the case in our lifetimes and for that reason, apart from any other, CCS remains vital.

I say that because one of the frustrations in our various discussions of CCS over the past few years is that every now and then, it becomes something that people alight and comment on, saying it is important and wanting to demonstrate commitment to it, but then the subject disappears again and when it reappears we find that we have not moved far along. That is not all the fault of the current Government or the previous Government; some of it is to do with technical issues. It is, however, vital that there is a sense of serious and significant engagement from the Government in the existing situation and into the future.

In August, the Government published their scoping document and there is a lot to commend in it. Interestingly, it also refers to carbon capture and utilisation, as well as to carbon capture and storage, which is another important and interesting aspect. There is no denying that many in the nascent CCS industry were disappointed with some of the content—or, more accurately, lack of content—in the scoping document about some of the big issues that my hon. Friends the Members for Wansbeck (Ian Lavery) and for Southampton, Test (Dr Whitehead) have touched on, particularly on the way in which contracts for difference will work for CCS technologies and how that will be taken forward. There was a level of expectation that things would at least begin to be addressed in that document in a way that, actually, they were not.

I am conscious that there have been some announcements this week. I am not sure whether the members of the Select Committee know—I was made aware of this while listening to the previous debate—but the Government have today released to the CCS Development Forum some proposals in relation to phase 2 projects that seem, from the summary that I have just been able to get by e-mail, quite interesting.

It is welcome that the Government propose to establish an expert group—the Minister may be able to help me if I have got some of the details wrong—that will probably meet before Christmas and will provide evidence to Ministers by April on the way in which phase 2 projects could be taken forward. I presume that that will be a matter for whoever the Government are post the general election.

That is a welcome development. I am also pleased that the UK Government and the Canadian Government this week signed a joint statement on a number of issues relating to CCS, but particularly about cost reduction, to which the Chair of the Select Committee referred. Other issues include the ways in which intelligence, expertise and experience can be shared to meet shared goals.

I was struck by the point that my hon. Friend the Member for Wansbeck made in his description of the series of cartoons about climate change. We could apply that to many different areas of energy policy. The point that I will make is that, often, the longer we leave decisions, the fewer options we have and the more expensive they become. That is certainly relevant in this case. My hon. Friend referred to the lead that the UK claims to have in relation to carbon capture and storage. He is right: we say and have said that frequently. We may not be in the lead, but we do have very significant academic and industrial expertise, which is important. We have the experience of earlier projects, including Longannet, which Scottish Power pulled out of a couple of years ago, for a range of reasons. Some were financial, but some were technical, so there is valuable experience from that.

We have something else that I think is quite important—potential storage capacity that, to other places in Europe, may well be very attractive. Depleted oil and gas fields are available and could potentially be sites for storage. The Select Committee Chair referred to some of the issues in relation to public acceptability. Members of the Committee will be well aware of the situation in Germany, where the public antipathy or opposition to carbon capture and storage was very strong from the very early stages because people were not comfortable with the idea of carbon dioxide being stored underground. However, if we have the opportunity to offer storage sites, a wider economic advantage could come with that.

There is a huge amount of opportunity, which we should not seek to underplay. My hon. Friend the Member for Wansbeck also touched on this issue. The opportunities in relation to economic activity are also potentially very significant. Not immediately but in the second half of the 2020s and beyond, this could be not just an enabler of industries continuing in parts of the country, including—not quite in his area—in Teesside and the cluster of industrial activity there; it could be, in and of itself, a significant employer. There is real potential, which has been highlighted by various bodies.

[Ian Lavery]

Does my hon. Friend share my disappointment that the project at Hatfield was withdrawn or was not successful in getting grant assistance from the Government, despite the fact that it was the top project in Europe in the NER 300?

[Tom Greatrex]

I do indeed. I think that I recall discussing that very issue with my hon. Friend when the decision was made. It was an absurdity to have the top-rated project in Europe and not to achieve the NER 300 support because of the inability of the UK Government to find match funding when they had been saying that £1 billion was available at that point within that comprehensive spending review period. We later discovered, of course, that that was moved to other infrastructure funds and was not then available. That is one of the frustrations that there have been along this bumpy road in recent years.

There have been other frustrations. Some are down to the attitude and commitment of the Government. Some are due to technical reasons and some are due to financial reasons. We have had a situation over many years—it predates this Government; it also existed under the last Government—in which confident predictions are made about how quickly CCS will be available and operational, but we have not met them. That makes the urgency of seeking to meet them all the more important in the years ahead.

The hon. Members who took part in the visit to Saskatchewan referred to the project there. I am struck by the comments just today from Michael Monea, the president of CCS initiatives at SaskPower, about the level of commitment required to ensure that it got the first project up and running. That is also an important point.

Hon. Members have referred to the 22 projects that there are currently around the world. There were previously about 70. Then the number went down to about 50 and now it has gone down to 22. The danger that we may have is that where CCS projects get up and running, they become almost engineering curiosities, isolated from anything else.

We should be very aware of the need to take the programme forward for further projects, because although the competition and the two projects that are undergoing their front-end engineering design studies at present—the Peterhead project and the White Rose project—are important, we want them to be the start of something, rather than just curiosities, as other things have been in the past. That is why I genuinely welcome the information that I got just a couple of hours ago about the work on phase 2 projects. I think and hope that that indicates real commitment to taking those forward, because without that, we will not achieve many of the things that we want to achieve.

The other point to make about industrial CCS is that of the 22 projects, only three are power stations; the remainder include industrial facilities manufacturing iron or processing other things and projects at natural gas processing facilities. That underlines the point about the importance of making progress on industrial CCS. Again, the Select Committee report highlighted that. Indeed, it concluded that there has not been the necessary level of commitment from Government in terms of promoting clustering and the benefits from that.

A range of difficulties are associated with seeking to do CCS for industrial processes, because there are, potentially, a number of different industrial companies on a site or within a geographical area. They will almost inevitably be operating at different points in their own economic cycles, and the capital available will be different. In some ways, it is probably conceptually easier to think about CCS for a power station than for a series of industrial processes in a geographical area, but that makes the case for greater Government discussion of and interaction and engagement with such projects, because for those reasons they are more difficult.

I am glad to have had the opportunity to take part in this debate on a subject that I personally find fascinating and interesting. I apologise for going on for a slightly longer time than I was probably allocated in order to expound some of my views. Carbon capture and storage is a vital process. Everyone who has taken part in the debate has made it clear that they see the importance and urgency of seeking to achieve it. There are different levels of optimism, but I think that we would be in a much worse position if CCS was not something that remained a realistic possibility.

I believe personally that in the long term CCS is a necessity, rather than an option, and that this and future Governments should engage in facilitating and helping to ensure that we manage to achieve that opportunity—for the benefit of our environment, our energy security and a number of different industries, which I very much hope will continue to be part of our economic model in the United Kingdom.