Energy Bill

Part of the debate – in the House of Lords at 9:30 pm on 22nd October 2008.

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Photo of Baroness Young of Old Scone Baroness Young of Old Scone Non-affiliated 9:30 pm, 22nd October 2008

My Lords, I hope the Government will not share that view because if the increased numbers of coal-fired power stations that are looming in the wings come forward, we will experience probably the greatest failure of the EU ETS and British energy policy for a considerable number of decades. I find it inconceivable that, when climate change is clearly the biggest threat and is an acknowledged part of government policy, we are even contemplating the idea of a number of coal-fired power stations when carbon capture and storage is an untested remedy and, even if it comes on stream, it will be possibly 10 to 15 years away. We know from the work of the climate change committee and from previous reports that the important thing is fast reduction of emissions. The 80 per cent target is important, but the most important thing is reducing total emissions in the early years. Having unabated coal technology coming on stream and pouring out carbon until such time as carbon capture and storage may come on stream will do nothing to resolve the problem that we have very little in the locker to reduce these early carbon emissions.

We have a failing of the EU ETS and of energy policy at this stage, although a number of things can happen. This amendment is one thing that needs to come into place. We need to get these early emissions down. The climate change committee highlighted the importance of decarbonising the power sector by 2030 and, as the noble Lord, Lord Teverson, said, many of these capital-intensive investments in coal-fired technology will be here for the next 40 to 50 years. Where will we be in 2030 if we still rely on coal-fired technology? If by then the EU ETS has made them uneconomic, are we seriously suggesting that investors should put their money into a technology that we know that economics will knock out of the market within the next 10 or 20 years? I do not think that is a wise proposition for the investment market.

What do we need to do? It is not unknown in the rest of the world for emissions performance standards to be brought in. They have them in some of the US states, Canada, New Zealand and Denmark. The noble Lord, Lord Teverson, raised the large combustion plant direction, for which, until recently, I was the regulator. It has emissions standards for a variety of pollutants, excluding CO2, and the coal industry accepted that as inevitable. The noble Lord, Lord Jenkin, put forward the idea that there is regulatory risk from ratcheting up standards, but business is well used to that from a string of European directives over the past 20 years and, provided it gets enough warning of ratcheted-up standards, it is relaxed about them.

The noble Lord, Lord Jenkin, quoted the noble Lord, Lord Stern. I shall quote in the opposite direction. In his original report, the noble Lord, Lord Stern, stated that:

"Carbon pricing alone will not be sufficient to reduce emissions on the scale and pace required", and that:

"In this transitional period, while the credibility of policy is still being established and the international framework is taking shape, it is critical that governments consider how to avoid the risks of locking into a high-carbon infrastructure, including considering whether any additional measures may be justified to reduce the risks".

We are clearly running the risk of locking ourselves into a high-carbon infrastructure. The Government need to take additional measures. The amendment would be one of them, but they should do other things as well. If clean coal is genuinely a global technology that we must embrace because other countries will continue to rely on coal, let us look at ways in which we can accelerate the carbon capture and storage proposition both at a European level, where it should be accompanied by a directive, a timetable and a funding plan, and at a UK level, with our demonstration projects.

We need to ensure that the lights are not turned off by looking at how we deal with the energy gap and at the energy security arguments. A considerable amount of work is being done that shows that if we were serious about the energy efficiency and renewables policies which the Government have adopted, there would be sufficient energy to meet UK base-load capacity in the delicate periods between 2012, 2015 and 2025.

The Institute for Public Policy Research produced a recent report called After the Coal Rush—I declare an interest as a trustee of the institute—which looked at the policy options for coal-fired electricity generation. Its view was that if the government strategy for meeting the renewables targets and the energy efficiency targets were achieved, the commercial case for conventional base-load coal was extremely weak. The arguments are clear. We are in a weird position in which the only propositions that are being made apace are for the most carbon-intensive energy-generation methodologies that will be set in concrete for 40 to 50 years, and I commend the Government to think very seriously about whether an emissions performance standard for all new generation should be put into place. It would not be wildly out of kilter with policies elsewhere in the world.