UK Decarbonisation and Carbon Capture and Storage

Sammy Wilson Excerpts

Tuesday 24th January 2017 Westminster Hall

[Sammy Wilson (East Antrim) (DUP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on introducing the debate. I suspect he will quickly find that we are not on the same side, but it is important, especially in the week when the Government have launched their industrial strategy, to have serious debates in the House on current and future energy policy. Of course, no industrial strategy can sit in isolation from a realistic energy strategy.

The first point of contention I want to make is that we seem uncritically to have accepted the mantra that we must decarbonise energy production. I know people say we have the Paris agreement, climate change obligations and so on, but we also need to look behind the mantra to see what the term means and has meant, and how it currently affects households, industry and business in the United Kingdom. The old Department of Energy and Climate Change estimated that to decarbonise the electricity and energy industries effectively by 2040, we needed 40,000 offshore and 20,000 onshore wind turbines and a new fleet of nuclear power stations, and that all coal and gas use would have to be subject to carbon capture and storage. That would happen at enormous cost, and we have already seen the impact on fuel poverty.

According to the Scottish household survey, there was a 25% increase in the number of households in fuel poverty in Scotland between 2011 and 2013. In Northern Ireland, there was an increase of nearly 100%. Why? Fuel bills go up because we have decided we want to produce energy more expensively. That is the first thing we need to realise in the debate. Decarbonisation means significant costs to the economy. Of course, this is at a time when we are talking about becoming more globally competitive, and when China and India, which signed the Paris agreement, tell us that every year they will increase their CO₂ by the amount of our total CO₂ emissions.

[Tom Blenkinsop]

I understand the hon. Gentleman’s frustration, but I see what we are doing as investment. Renewables, whether photovoltaic or wind-generated energy, have the capacity to be used, for example, in the creation of hydrogen gas. There is a future in which we could create gas at zero cost, with surplus renewable electricity for the consumer. In transport network terms, the ability to spread that around the country is vast. I see it as an investment that is expensive at the moment, but whose rewards we will reap if we stick to those commitments.

[Sammy Wilson]

Of course the people who pay for that expensive investment are the taxpayers, because there is less money for other public services; electricity consumers; and workers who lose jobs in the industries that can no longer compete.

[Carol Monaghan (Glasgow North West) (SNP)]

Will the hon. Gentleman give way?

[Sammy Wilson]

No. I only have seven minutes and I do not want to rule out my hon. Friend the Member for Strangford (Jim Shannon), or I will get in his bad books.

My second point is on the action required to do what is envisaged. As has been mentioned, part of the infrastructure is in place, and we may well be able to use redundant oil pipelines, but they must be linked to power stations, which must be where the centres of population are. I am fairly sure that we do not want to build power stations where most pipelines come ashore, unless we mean to build a huge infrastructure to distribute the power. Environmentalists have not cottoned on to the point that the plan is like fracking in reverse. Instead of fracking to get gas out of the ground, we will pump gas into the reservoirs, with all the same implications, according to environmentalists, for stability and leakage.

We in Northern Ireland are going through a constitutional crisis because of a botched energy scheme. I do not think that that warranted the outcome, but nevertheless we are living with it. I want to hear from the Minister about four things related to that. First, what will the cost be? Secondly, if there are costs involved, who pays them? Thirdly, what about the incentive structures? It is not lost on anybody that even some producers of traditional energy are now running after all of these green schemes. Why? Because the lucrative incentives increase their profits and fill their coffers—we saw that with the scheme in Northern Ireland. Fourthly, what kind of regulatory framework will be put in place?

The Government are right not to go ahead with the second exercise until they are sure of the answers to those questions. Even more fundamentally, they must ask whether the impact of decarbonising the economy on consumers, workers, industry and investment is worth it.

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in the debate. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on raising the issue. I may have a slightly different opinion from my dear friend and colleague, my hon. Friend the Member for East Antrim (Sammy Wilson).

[Sammy Wilson]

Maybe I should not have given my hon. Friend the time.

[Jim Shannon]

My hon. Friend may regret it, but it will not diminish our friendship in any way whatever. It is good to have a broad church of opinion within our party.

I will pose some questions because it is important to do so. Environmental issues are of great importance, so it is essential that our strategy is effective. I say to the Minister that I am not sure that we have managed to achieve all we could or should thus far. That is the question many have posed, including the hon. Member for Coatbridge, Chryston and Bellshill during his introduction.

It is opportune that we are having the debate on the back of the industrial strategy Green Paper announced by the Department for Business, Energy and Industrial Strategy yesterday. Many believe that the Department has not achieved value for money for its £100 million spend on the second competition for Government financial support for carbon capture and storage. Other hon. Members have said that there must be an investment to get a return, and that the return will justify the investment.

It is my understanding that CCS is a process to avoid the release of carbon dioxide into the atmosphere, and that it has the potential to help to meet the UK’s target for a reduction of CO₂ emissions in both the power and industrial sectors, which is commendable. We have pledged to cut 1991-level emissions by 57% by 2030. While that is a great goal, how will we achieve it? Hon. Members have outlined potential job creation and the opportunities that will come if it is done in the right way. To achieve the goal is most certainly a challenge, given the untried nature of the technology.

[Jim Shannon]

I will respond to the hon. Gentleman’s intervention during my comments. The future costs for the duration of the CCS project are unknown, and perhaps the figures do not add up on all of the lines.

Two projects that were shortlisted for the CCS process both failed to meet the proposal goals. The work done centrally by the Department in sustaining negotiations for the second competition for the project with its preferred bidders must be noted—a process is in place. The hon. Member for Coatbridge, Chryston and Bellshill has clearly outlined some of the evidence, and I will pose some questions on that. I can clearly say that I support the principle of what we are trying to achieve, but I wonder whether it can be achieved by that process. There are lessons to be learned, and hopefully valuable commercial knowledge and technical understanding of how to deploy the competition projects will have been gained, as he said. If we have that information, let us see how we can use it to further the project.

There are currently no examples of large-scale CCS projects in the UK, and only 16 operational projects worldwide. BEIS should maximize its expertise for future CCS strategies and put into practice the lessons it has learned—in other words, the evidence should be used for the betterment of delivering such projects. If and when CCS projects are self-sustaining and economically viable, we will see clean electricity from renewable sources, which we wish to see and are committed to trying to achieve. However, the sticking point is in the phrase “if and when”, meaning we could achieve those things “if and when” the Government and BEIS find a happy medium and the in-between. Hon. Members are often tasked with finding a balanced in-between or the correct way forward.

The substantial future benefit of the CCS process is to avoid the release of CO₂, as several hon. Members have indicated. However, it is clear that there are serious problems and critical issues with such projects that we cannot ignore. As I have discussed, there are no large-scale examples of long-term storage projects in the UK, despite a series of UK Government and EU initiatives aimed at incentivising their development. It has been argued that CCS technology is too expensive to be commercially viable for private developers without Government support in the shape of a strike price. Government involvement is critical in taking this forward.

I am aware of the work carried out by the parliamentary advisory group on carbon capture and storage, which found that good design could make CCS affordable. However, I have reservations about the cost of CCS competitions to the taxpayer.

[Sammy Wilson]

Does my hon. Friend agree that a high strike price will be paid for out of the pockets of every one of his constituents who consumes electricity? That is the big problem with schemes of this nature, for which there is a move away from cheap fossil fuels to dear renewable sources.

[Jim Shannon]

The Minister will take note of my hon. Friend’s comments and am sure will respond later.

We have seen not one but two failed voyages into the unknown of CCS projects, for which we have spent £168 million with no further resolutions and only lessons learned. We do not want this to be like the Mary Celeste— setting sail, getting nowhere and disappearing. It is my understanding that the cancelling of the second competition will impact on investors’ confidence, who in future may demand better conditions before engaging with the Government again, which will prove detrimental to the cost-effectiveness of future projects.

We do not want this to harm the future and where we are going. I feel strongly that both the Government and BEIS need success guaranteed in both financial and environmental areas before embarking on such voyages in the future, and as such I believe that every consideration must be given to how this particular project will help us to achieve our goals, and indeed whether it can do so.