Coal-fired Power Stations

Nigel Adams Excerpts

Wednesday 27th April 2016 Westminster Hall

[Nigel Adams (Selby and Ainsty) (Con)]

I congratulate my hon. Friend the Member for Cannock Chase (Amanda Milling) on securing this timely and important debate. I know that this subject takes up an awful lot of her time. Having been elected only last year, the last thing she wanted to find out about a few months into her new role was the closure.

[Michael Fabricant]

And there is HS2.

[Nigel Adams]

That is a whole different debate. It is timely that we are discussing this issue today. Members may have seen the news earlier this week that Aberthaw power station, Wales’ largest coal-fired power station, will reduce its operating hours from 1 April next year. That is just the latest in a long line of announcements from power stations up and down the country that have decided either to downgrade their operations significantly or to close their gates completely. Such announcements inevitably have severe and wide-ranging consequences.

We often refer to the trilemma when discussing the pros and cons of UK energy policy, but the widespread closure of our coal-fired power stations presents its own trilemma. The first challenge is the clear impact the closures have on the communities in which the power stations are based. My hon. Friend the Member for Cannock Chase outlined that. She speaks passionately about the uncertainty facing her constituents who work at Rugeley and the distress that uncertainty inevitably causes locally and regionally.

Unfortunately, I have witnessed similar scenes in my constituency. Eggborough power station, which employs almost 300 people, was on the brink of closure earlier this year—it had announced a consultation on plans to close—until its new owner, the Czech group EPH, managed to secure a contract with the grid to provide extra capacity this winter. But it is just a year’s contract. It is a stay of execution; we cannot ignore the fact that a cloud still hangs over Eggborough’s future.

By contrast, Ferrybridge power station, which is right on the border of my constituency—I know it well—was not so lucky. It was forced to close earlier this year, to the detriment of the hundreds of workers based there. If that is added into the mix with the closure of Britain’s last deep coal mine at Kellingley colliery, which is also in my constituency and which closed last year, these are unquestionably very challenging times in my part of north Yorkshire.

As well as the socioeconomic impact of the closures, we need to consider the consequences for the nation’s energy security, which is the second element of the coal trilemma. At least 2.5 GW of coal closures have been announced in recent months, in addition to the 4.9 GW announced last year. That power would otherwise be supplied to millions of homes throughout the country. By losing those units, we are diminishing the resilience of our grid and its ability to absorb unforeseen risks.

Our margin of capacity, particularly when it is cold in winter, is already worryingly low. We are also significantly reducing the number of power stations that can provide ancillary services, such as system balancing, frequency response and black start, which allows us to turn the lights back on in the event of grid paralysis or partial shutdown. In the absence of coal-fired power stations, how will we procure such essential, often under-appreciated, services in future?

Because of the technical nature of this subject, I find there is a lack of understanding of the comparative capabilities of different types of power generation. Intermittent renewables, along with nuclear, are simply technologically incapable of delivering the services I have described. The lack of nuance in consideration is leading us blindly to risk our energy security.

The third element of the coal trilemma is cost. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), has rightly said on many occasions that securing electricity at the least cost to consumers is an absolute priority. We totally buy into that—it is a commitment the Conservative party made in our general election manifesto and it is one we should keep.

If we are to pursue an orderly transition away from coal, as the Government intend, it is only right that we do so in the most affordable way possible. That is why it is so important that, when we consider which technologies to promote to fill the gap left by coal, we do so on a whole-system cost basis. Such an approach more accurately reflects the costs that intermittent generators pass on to the system because they are not available all the time.

I understand that during yesterday’s meeting of the Energy and Climate Change Committee my hon. Friend the Minister of State noted that the latest analysis her Department has commissioned on whole-system costs is currently being peer reviewed and is nearing completion. I congratulate my right hon. Friend the Secretary of State for Energy and Climate Change on pushing ahead with that and urge her to make the findings available as soon as is practically possible, so that they can inform the growing debate on this incredibly important issue.

We face three key challenges associated with coal coming off the grid: the socioeconomic impact, the security of supply impact, and the cost of filling the gap. On the face of it, it seems a particularly daunting task, but I am pleased to say that it is not insurmountable. Nowhere is that more vividly illustrated than at the Drax power station in my constituency—if you think you have cooling towers in your neck of the woods, Ms Ryan, there are certainly plenty more in my part of north Yorkshire.

Many Members present will be familiar with Drax. It is the largest power station in the UK and generates approximately 8% of all the UK’s electricity. Over recent years it has gone through an incredible transformation by converting and upgrading some of its generating units to use sustainably sourced compressed wood pellets instead of coal. In doing so, it has addressed the three core issues I mentioned earlier.

On socioeconomic impact, switching from coal to biomass has helped Drax to protect and secure the 850 employees who are based at the power station. It has also created new employment opportunities across the biomass supply chain, which has attracted hundreds of millions of pounds of private investment.

On security of supply, thanks to the conversion it has already undertaken, Drax has become the UK’s single largest source of renewable electricity. Around 12% of the UK’s renewable power came from Drax in 2014. Crucially, this power is not only renewable but flexible and dispatchable, like coal or gas. It is available as and when we need it and can be ramped up or down to respond to the requirements of the grid at a moment’s notice.

On costs, as I have stated often in Westminster Hall and many times in the main Chamber, on a whole-system costs basis biomass is the cheapest and most affordable renewable technology available to us today.

[Andrew Percy]

Will my hon. Friend give way?

[Nigel Adams]

I am happy to give way to my hon. Friend and neighbour, who also has the benefit of looking at the cooling towers at Drax.

[Andrew Percy]

I declare an interest: I live opposite the Drax power station and a small wind farm. People are taxed by the wind farm, which does not create any jobs, and very supportive of the power station, which does.

Does my hon. Friend agree that biomass makes sense, not only on a cost basis, but because the industry supports jobs in the UK in a way that some of the alternatives do not? He mentioned the many power station workers, but the whole supply chain goes all the way through our region, including to the ports, which have taken a big hit in the Humber because of the loss of coal imports. Support for biomass makes sense on so many different levels. We need Ministers to work cross-departmentally to get a proper assessment of the industry’s true value to the whole UK.

[Nigel Adams]

My hon. Friend is absolutely right. The regional impact on supply chain jobs is huge, not just for the ports, which are hugely important, but for rail as well. The wagons that Drax has commissioned to transport biomass—I had the great honour of launching them at the National Railway Museum—were built by a British company.

With respect to costs, we have to remember that it was the taxpayer who built these power stations right across the country under the Central Electricity Generating Board. We have already paid for these stations, so it makes absolute sense that we should—to use an unpopular phrase—sweat these assets as long as possible to ensure that we get the best possible value out of them for the taxpayer.

Reusing the existing infrastructure at a power station essentially eliminates the substantial grid connection costs and upgrade work that are associated with new builds, and that might have contributed to so few new stations being built. It also reflects the value that dispatchable power adds to the energy grid by balancing the system while the wind is not blowing and the sun is not shining—we all remember the problem with the grid last November.

Going from being western Europe’s largest coal-fired power station to being its biggest de-carbonisation project in less than three years has made Drax an incredible success story. The question is, then, how can we build on that success and, where possible, replicate it at other sites around the UK? It may be too late for Rugeley, but other stations could certainly benefit from conversion.

A sensible and practical solution would be to allow coal power stations to compete for Government support to convert to biomass in upcoming contract for difference auctions. The auctions could operate on a whole-system basis to allow the stations to compete on a level playing field against other renewable technologies. The biomass industry—I declare an interest as the chair of the all-party parliamentary group on biomass—is not looking for any special treatment; it just wants the opportunity to bid on a level playing field along with other technologies.

Alternatively, funding could simply be provided through the dedicated biomass pot that already exists to support biomass conversions. That pot does not currently allow bids from those who are looking to convert, only from new station builds, which are very costly. That does not seem to make a lot of sense when we already have the infrastructure with coal power stations.

I recognise that the Minister has previously indicated that £730 million has been committed to supporting less-established technologies in the CfD process through to 2020. However, research recently completed by NERA Economic Consulting and Imperial College London has shown that DECC could save consumers up to £2.2 billion by supporting biomass alongside offshore wind as part of a more cost-effective renewable energy mix.

In conclusion, I urge the Minister to work closely with his colleagues at DECC to consider how further biomass conversions could also be facilitated in the near future in the light of the significant benefits that I and my hon. Friends have outlined here today. Biomass is simply the quickest and most cost-effective way to get coal off the grid. As a nation we should look to promote its deployment further through additional station conversions while we still have a window of opportunity to do so.

--- Later in debate ---

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I thank the hon. Member for Cannock Chase (Amanda Milling) for obtaining a debate on this issue. Clearly, the imminent Rugeley power station closure prompted it, and I applaud her for her efforts in seeking retraining packages and jobs for staff, as well as financial aid to decontaminate the site for redevelopment. I wish her the very best in her endeavours. None the less, the Conservative Government’s commitment to a decade of austerity continues to strangle development, competition and investment in the UK’s energy sector.

There have been some excellent contributions to the debate. The hon. Member for Cannock Chase spoke extensively, passionately and eloquently about reuse of the site after demolition and decontamination. Her points were reiterated and supported by the hon. Members for Tamworth (Christopher Pincher) and for Rochester and Strood (Kelly Tolhurst); but I offer words of caution, if the hon. Lady will have them. In the constituency of Motherwell and Wishaw, which neighbours mine, we have made great use of the land that was vacated following the destruction of the Ravenscraig steelworks by a similarly right-wing Conservative Government; but our experience is that enterprise zones, houses and sports and leisure facilities are no substitute for jobs. I will focus on that and related issues.

My hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) recounted his experience of the failure of a specific energy provider, Carlton Power, to build a power station. That was due to legislative changes, among other things, and it was frustrating to investors. My hon. Friend quoted Scotland’s Minister for Business, Energy and Tourism, and spoke about the Longannet closure, which resulted in the loss of key jobs and problems for the community.

Given that so many Staffordshire Members have spoken, I am surprised that there has been no mention of Shakespeare yet, but I am sure—[Hon. Members: “Warwickshire!”] Is it Warwickshire? That is why, then. I stand corrected. It all sounds the same to me.

As my hon. Friend the Member for Linlithgow and East Falkirk mentioned, in March, Scottish Power closed the Longannet coal-fired power station. More than 200 direct jobs and more than 1,000 in the supply chain were lost. The problems and devastation that such closures can cause to the families and communities that are all too often heavily reliant on such large power plants are evident to many in Scotland. Having seen the detrimental impact in Scotland, I sympathise with those affected by the Cannock Chase closure. Geographically based transmission charges were much to blame for the closure of Longannet, but the commitment of the Secretary of State for Climate Change and Energy to overseeing a consultation on ending unabated coal-fired power stations by 2025 doubtless played its part in both closures. As the Financial Times reported last November, the Secretary of State wants more gas plants to replace the coal plants.

What of the future of coal-fired power stations? That, after all, is what the debate is about. The shorter answer is that without carbon capture and storage alongside, they appear not to have a future in the UK. Carbon capture and storage, for anyone not familiar with it, is a technology that can currently capture about 90% of the carbon dioxide emissions produced by fossil fuels in electricity generation and industrial processes, preventing the carbon dioxide from entering the atmosphere. It is seen as essential alongside coal-fired power stations, to enable UK and world climate change targets to be met. There are working CCS plants such as Boundary dam in Canada and numerous others in the US and Norway, but the world seeks its first large-scale operational plant to further prove the viability of that rapidly advancing technology and the opportunity to improve emissions capture to above 90%, which is the current target.

The previous UK Government created a £1 billion fund to seize the opportunity to have fully functioning CCS projects in the UK. Until last year, we were set to proceed with CCS projects at the White Rose coal-fired power station in Yorkshire—in the constituency of Selby and Ainsty, I believe—and at the gas-fired power station in Peterhead in Scotland, which I was fortunate enough to work on for Shell. The Chancellor’s cancellation of the CCS funding late last year was the latest in a long line of greener and renewable energy cuts that set us yet further back on our journey to cleaner energy.

In November 2014, the BBC reported on how changes in Government energy policy were likely to increase CO₂ emissions rather than reduce them, citing—my hon. Friend the Member for Linlithgow and East Falkirk mentioned a few of these—the block on solar in the countryside, the cut to the industrial solar subsidy, cuts to solar subsidy for homes, cuts to biomass subsidy, scrapping the green deal, cutting zero-carbon homes, imposing carbon tax on renewables, blocking onshore wind, increased tax on small cars, tax breaks for the oil and gas industries, cutting zero-carbon offices and support for community energy and selling the Green Investment Bank, to name just a few changes. Ironically, those short-term savings will cost us in the long term.

The UK Committee on Climate Change told the Secretary of State that the cost of meeting the 2050 decarbonisation target will be twice as high without a carbon capture and storage programme. The CCC points out that the proposed budget to 2032 is a minimum and suggests that the Government be prepared to do more, not less, to reduce total UK domestic carbon emissions in line with the Paris agreement objectives. The committee also noted that greater decarbonisation ambition will be needed by the European Union. In short, we need to make more reductions. For that, CCS is essential, and an urgent plan is needed for a minimum of 7 GW of clean power by 2030, together with support for industry-wide decarbonisation.

Professor Stuart Haszeldine, director of Scottish Carbon Capture and Storage, commented:

“To stay on track in the ‘high ambition coalition’ of leading nations agreed in Paris climate talks, the UK needs to do a lot more on UK electricity, and a lot more on UK low-carbon industry and low-carbon heat. But now this government is doing a lot less.”

He went on:

“There is no sign yet that facts, unbiased scientific evidence and rationality are regarded as more important than lobbying by corporations and colleagues wishing to take the UK back to the 1960s energy mix”.

That would be a retrograde step. Professor Haszeldine said there was a choice—and it is a stark one—

“between spending £40 per household in 2016 or spending £200 per household each year from 2050. We can afford it.”

The Times reported in December 2015, during the Paris climate change conference, that worldwide more than 2,400 coal-fired power stations were under construction or planned, mostly in India or China. Without CCS, that makes a mockery of the world’s climate change commitment. The UK was in prime position to have a positive effect in the ongoing reduction of the world’s coal-fired power station emissions. Given the progress made in CCS, we had the opportunity to become the world leader in large-scale CCS project design and construction, something that would have been great not only for UK businesses, but also for the world at large, as the UK would have been able to provide a substantial decrease in global CO₂ emissions by providing more efficient and affordable CCS schemes, with ever-rising emissions capture figures.

We cannot discuss the future of coal-fired power stations without thinking about ethical coal mining. The UK Government’s decision to import coal, rather than investing in an export-led energy market in the UK, has had detrimental consequences on human lives and the environment. According to Government figures, nearly 4 million tonnes of Colombian coal was imported to Hunterston in North Ayrshire alone in 2013. Rogelio Ustate from the Federation of Communities Displaced by Mining in La Guajira stated:

“The coal which is used to warm your houses on cold nights is the same coal which has taken our homes from us.”

Workers face poor and dangerous working conditions in mining much of our imported coal. It is not lost on the few British miners who remain that we no longer have deep mines in the UK, as hon. Members remarked earlier. That is despite the fact that the UK has massive coal reserves to draw on, especially in Scotland. At least if we mined the coal locally it would be ethically sourced, and it would also create jobs.

I must point out the differences in policy between the UK and Scottish Governments. The UK Government have failed to provide the fiscal incentives necessary to stimulate investment in conversions of former coal-fired power stations. Despite a commitment to ending coal power by 2025, the UK Government have failed to produce the financial backing and/or incentives to enable the UK energy market to transition from its heavy reliance on fossil fuels to being the more renewables-based energy market we seek, as per our climate change targets. The Scottish Government are concerned that the UK will continue to import energy despite the vast untapped potential of the UK’s energy market, especially in Scotland. That is especially pertinent given the potential disaster of the Government’s “all your eggs in one flawed basket” energy policy, and the French and Chinese nationalised companies at Hinkley C nuclear power station.

The Scottish Government believe that we must carry out comprehensive research into the viability of the conversion of plants to carbon capture and storage. Experts deem that prospective site planners may favour sites that are already equipped with a grid connection and immediate infrastructure. As a member of the CCS advisory committee, I concur with those findings. Industrial hubs where there is power generation, and which are linked to existing CO₂ transportation and storage systems and the power grid, are deemed the most likely locations to succeed.

Dr Jenifer Baxter, the head of energy and environment at the Institute of Mechanical Engineers and the lead author of the report, “Engineering the UK Electricity Gap”, said:

“The UK is facing an electricity supply crisis. As the UK population rises and with the greater use of electricity use in transport and heating, it looks almost certain that electricity demand is going to rise…However, with little or no focus on reducing electricity demand, the retirement of the majority of the UK’s aging nuclear fleet, recent proposals to phase out coal fired power stations by 2025 and the cut in renewable energy subsidies, the UK is on course to provide even less energy than it does at the moment.”

That does not bode well for energy users.

Unless we reverse the abandonment of the cleaner renewable energy incentives for the failing Hinkley C nuclear power programme, and the Government’s rash dash for gas—fracking—this country will face an energy supply crisis. We will become ever more reliant on imported energy, despite the massive resources and skills at our disposal.

The UK Government’s decision to slash the fiscal infrastructure for carbon capture and storage has failed to facilitate matters for the coal industry in Scotland and elsewhere in the UK. The Scottish Government believe that financial backing and subsidies must be put in place to give the energy market the fiscal incentives necessary to stimulate investment in coal-fired plant conversion to CCS-converted plants.

[Nigel Adams]

The hon. Gentleman mentioned that the proposed White Rose project would have been sited in my constituency. It would have created many thousands of jobs—not just construction jobs, but hundreds of ongoing jobs, too. I want to clarify a point: is it the Scottish Government’s policy to convert every single coal-fired power station into a CCS plant?

[Philip Boswell]

As other hon. Members said, some plants are more susceptible to conversion than others. As the hon. Gentleman said, it makes sense to sweat out the value of power stations that we have already paid for. It very much depends on the technology. We must evaluate whether power stations are fit for purpose on a case-by-case basis. The secret is to create a world-leading industry. We had the opportunity to do so through carbon capture and storage, which would have enabled us to sell CCS, develop it, increase it from 90% of emissions to 92%, 94% and 96%, and create an industry and a supply chain in the UK for exportation and exploitation around the world.

Ironically, the Chancellor said explicitly that his latest Budget was

“a Budget for the next generation.”

It is not, and the bleak legacy left for the next generation is nothing to be proud of—skills shortages; a lack of research, development and innovation; and the wider economic implications of the UK having an import-led energy sector. Those are the results of the Government’s complete mishandling of energy. The failure to seize the opportunity that carbon capture and storage presents to the UK and rest of the world for managing the effects of the continued use of coal-fired power will sound the death knell for coal-fired power in the UK. That missed opportunity is one more failure in the long list of the Government’s energy policy failures. It will create a toxic financial legacy, which will be a problem for future generations.

--- Later in debate ---

[Dr Whitehead]

I will get the entire title of the hon. Gentleman’s constituency right one day. He will have to forgive me for not getting the various parts entirely correct. As he said, coal-fired power stations in this country will not have a future unless there is a clear programme accompanying their development to capture 90% of their emissions through CCS.

It was with considerable regret that we saw the termination of the UK’s two potentially world-beating pilot projects for comprehensive CCS; among other things, they would have paved the way for a much more widespread implementation of CCS for new and existing power stations across the country. I do not think that the route to CCS in this country is dead, although I was sad that the Opposition’s call for a comprehensive new CCS strategy from the Government, which we made during the passage of the Energy Bill and which was supported by the Scottish National party, was not incorporated into the Bill. In the light of the termination of those projects, there is an urgent need to develop a viable new way forward for CCS, whether exclusively in this country or in collaboration with other countries, to keep alive the idea that it is possible to attach CCS to power stations in future.

[Nigel Adams]

I am pleased that the hon. Gentleman agrees that there should be a way forward for CCS, but does he not also agree that, although the Government funding allocation has disappeared, the industry itself could step up to the plate and drive forward a UK CCS industry?

[Dr Whitehead]

I hope the industry will be involved in that. However, the hon. Gentleman ought to bear in mind that, although a great deal of intellectual property remains from the project that was to take place in his constituency, for example, the project itself was not at all progressed—the CCS industry in this country remains nascent, so for the industry to take on the load of developing itself to any extent over the next period seems to be quite an ask. It is therefore essential for the Government to become involved in strategising and underwriting the development of CCS. I hope that that will now be done, even if it is not at the same level of expense as in the original two projects supported by the Government.

On the future of coal-fired power stations in the UK, it is important to be clear. The proposal is to close all coal-fired power stations by 2025, which has been mentioned this afternoon. The Government have suggested that there should be a consultation leading to the closure, subject to the caveat put forward last autumn by the Secretary of State in her energy reset speech:

“we’ll only proceed if we’re confident that the shift to new gas can be achieved within these timescales.”

That is the caveat on the proposal to close all coal-fired power stations by 2025.

The estimate is that only something like 1% of our electricity will be supplied from coal by 2025 because of the closures of coal-fired power stations for various reasons, other than the Government saying that they should close by 2025—those reasons include the European large plant directive, the age of the plants, the running out of the plants, and the economics of running them. Therefore, those plants are likely to close by that date anyway. One way or another, we face the prospect of pretty much all coal-fired power stations in the UK being closed, and the hon. Member for Cannock Chase rightly raises the issue of what will happen to those sites. What should be done with all of them, not just Rugeley B power station?

A number of us can sympathise with the issue of what happens to a large site that is vacated in or around one’s own constituency. Recently, a Ford transit van plant located on the edge of my constituency closed, creating a 600-acre site. We need to think carefully about assistance for the people who have been displaced from the site by the closure, the different possible uses for the site, and the best use given its connections and how it is going to work in future. Those are all important considerations, and the hon. Lady is clearly alive to all the issues to do with what can be done with the Rugeley B site.

No other world car manufacturer is hovering in the wings, waiting to occupy the Ford site near my constituency and to build cars instead of the Ford Motor Company. However, as far as Rugeley B is concerned, the hon. Lady has looked at whether it could remain, if not as a coal-fired station, then as another form of power station. That particular line of reasoning makes considerable sense. Her suggestion is also germane to the issue of our energy mix in future years: could Rugeley B be converted into a gas-fired power station?

Like the hon. Member for Lichfield (Michael Fabricant), who I am afraid is no longer in his place, I looked at Google Maps and a large National Grid gas line runs right alongside Rugeley B power station. So the question of changing the configuration of Rugeley B from coal to gas is, in principle, very doable as far as the supply of gas to the power station is concerned. The issue would be the circumstances in which any such conversion could take place. My concern is that, in particular instances, the mechanisms in this country for encouraging the development of new gas-fired power stations, assuming that we need a number of them over coming years—