Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

Good morning to you, Mr. Amess, and to the Committee on this sunny day. We discussed much about carbon capture and storage last week, but we now have the opportunity to consider it in more detail. While clause 16 will prohibit the storage of carbon dioxide without a licence to ensure that such storage is carried out in a safe and responsible manner, clause 17 will give the Secretary of State, or an authority to which the licensing function has been transferred under clause 33, the power to license the carbon dioxide storage-related activities.

In addition to such a licence, a lease or an authorisation in respect of the relevant offshore space to be licensed by the Secretary of State must be granted by the Crown Estate, because it has ownership rights within 12 nautical miles of the territorial sea and relevant rights—possibly up to 200 nautical miles—will also be vested in the Crown under clause 1. The Crown Estate will grant leases or authorisations on commercial terms to operators for the storage of carbon dioxide within those areas. Such leases or authorisations will prescribe the geographical space in which the CO2 can be stored, as well as specifying the period during which the site can be utilised.

The clause will ensure that the areas covered by the licence and the Crown lease can be easily co-ordinated. In the absence of such co-ordination, there would be a risk, for example, that the licence would continue to apply when the lease had expired. In such circumstances, the operator would have to discontinue its activities, as it would be on the Crown Estate’s land without the necessary authorisation from the Crown Estate.

Martin Horwood (Shadow Minister (Environment), Environment, Food & Rural Affairs; Cheltenham, Liberal Democrat)

At an earlier sitting, the hon. Member for Southampton, Test made some interesting points about the Crown Estate and how much co-operation was guaranteed in the delivery of policies such as the licensing regime from the Crown Estate. Has the Minister had time to reflect on the issues raised by the hon. Gentleman, as they seem directly relevant to the clause?

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

I am still reflecting on such issues and have asked for advice. I am minded to write to my hon. Friend the Member for Southampton, Test with some detail, a copy of which I shall give to all members of the Committee.

Stephen Ladyman (South Thanet, Labour)

Good morning, Mr. Amess. I want to make a general point about the whole chapter, and our discussions on the clause is probably the most appropriate place to do so. I refer my hon. Friend the Minister to our final evidence session and question 196, which was asked by my hon. Friend the Member for Copeland. It received an answer from Mr. Chris Mansfield, who said:

“In principle, if you look at the provisions in the Bill and the proposals put forward by the European Commission in a draft CCS directive in January, the intent, which is very much supported by industry, is that that is a liability that should be taken on—at an appropriate point in time—by the state.”—[Official Report, Energy Public Bill Committee, 19 February 2008; c. 102, Q196.]

He goes on to say that he does not think that it is reasonable for businesses to have to assume the liability for ever, that businesses do not last for ever, but that the state goes on, so the liabilities must fall eventually on the state.

As a consequence of that intent, the clause and the related clauses in the chapter have been drafted in benignly. The business is regarded as benign and one that we wish to encourage. We do not wish to put barriers in its way, as we do not want to scare people away from it. I contrast that point with the later chapter that deals with nuclear energy and the liability that comes from the necessity to store nuclear waste and to have a decommissioning proposal. That chapter is written with an entirely different tone, along the lines of, “This is a very dangerous business. You’re in it to make money, and we’re going to lock you down and make sure that you pay every penny.” It includes clause 60, which I call the “We’re going to hunt you down to the ends of the Earth to make sure that you pay up” clause. It also includes clause 62, which I call the “Don’t you think you’re going to get tricky with us, because we’ll come after your neighbours and your friends as well” clause. Effectively, it is written in a completely different tone to this package of clauses, including clause 17, which is written from the point of view that the matter is benign.

Yes, this is a benign business, but people will be in it to make money. It involves the capture of a dangerous material that will have to be stored for a very long time, for which people will have to be responsible for a long time. Although I entirely accept the benign tone of the chapter, I raise the point now because when we consider the chapter on nuclear energy, the decommissioning of nuclear energy resources and long-term storage, I will wish to talk to my hon. Friend the Minister about the difference in tone in that chapter and ask whether we have got it right, or whether it would be better to make amendments to encourage investment in nuclear energy, in the same way as this chapter is phrased to encourage investment in carbon capture and storage.

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

That was an interesting speech. When examining aspects of climate change and energy policy, I often reflect that if the well-known saying of  Harold Wilson that “a week is a long time in politics”—we have had one or two of those weeks recently—is at one end of the continuum, looking at targets for CO2 reduction, the effects of carbon emissions on our planet and the longer term issues about CO2 storage and the storage of nuclear waste is right at the other end. Here we are in 2008, trying to do our best to make policy for decades and centuries ahead—perhaps millennia ahead as regards CO2 storage and a long time ahead for nuclear waste—so my hon. Friend the Member for South Thanet has raised an interesting point.

Nuclear energy is, or should be, a profitable business. It is not unreasonable to ensure that the companies in the business pay the full costs. We will have some debate about the full costs, and how we calculate them is a perfectly legitimate discussion to have. However, we have always recognised that there comes a point, when the geological repository is sealed, when the state takes over that responsibility for the long term—no one else can. No one can quite predict what the state will look like in half a million years.

Charles Hendry (Shadow Minister, Business, Enterprise and Regulatory Reform; Wealden, Conservative)

You will be out of government.

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

It is that kind of time sequence that we are planning, yes.

The reason why Governments such as our own have to find taxpayers’ money for demonstration projects is that there is, as yet, no money to be made out of CO2. It is not yet a profitable business, although it could well become a commercial business in the future, and it will need to. Hence, perhaps, the benign tone that my hon. Friend refers to.

Stephen Ladyman (South Thanet, Labour)

If my hon. Friend is not in power in half a million years, I at least expect there to be a large portrait of him on the Committee wall, staring down at the people who follow us. He is absolutely right that carbon capture and storage is not yet a profitable business, but nobody is proposing that the Government subsidise it for ever. It is intended that it will become a profitable business. It is a good business, we want people to be in that business, but nuclear energy has an equally important role in reducing carbon dioxide and fighting climate change. However, just as people in that industry need to be responsible for their liability, so do those responsible for carbon capture and storage. I want to see an even playing field for the two industries.

Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

I take my hon. Friend’s argument. Last week, I implied that, in my judgment, the nuclear clauses of the Bill will not go through on the nod—that is my political instinct—and I am therefore sure that there will be an opportunity to discuss those matters. To sum up from that interesting intervention: there are things in common between CO2 and nuclear in that the commercial entity must take responsibility for eventual decommissioning. Similarly, in the very long term, only the state can take responsibility. However, there are also differences, which we will no doubt return to.