Committee (2nd Day)

Part of Energy Bill [HL] – in the House of Lords at 4:45 pm on 9th September 2015.

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Photo of Viscount Ridley Viscount Ridley Conservative 4:45 pm, 9th September 2015

My Lords, I apologise for not being here on Monday to take part in the debates then, and I hope that the House will indulge me in speaking today. I declare my interests in surface coal-mining in the north of England. None the less, and to their astonishment and probably horror, I would like to support the amendment in the names of the noble Lord, Lord Oxburgh, the noble Baroness, Lady Worthington, and the noble Lord, Lord Teverson. It has enormous merits and is a good suggestion, although they should not worry because I will disagree with them on things towards the end of my remarks.

I welcome the remarks of my noble friend the Minister that he wants to discuss CCS further, and I hope that he might be able include me in those discussions. I want to suggest as an extra twist—and the noble Lord, Lord Oxburgh, touched on this—that we must link this to some kind of alleviation of the carbon imposts on the industry, which are throttling various British industries at the moment, in particular the carbon floor price. What I like about the suggested amendment is that it avoids the distortion of supporting carbon capture and storage through the contracts for difference, and that it should work at no cost to the taxpayer and makes use of market mechanisms.

I think that we now have to agree that the world needs fossil fuels during this century, if only to give the billion people in the world who have not got access to electricity the chance to have access. We cannot get emissions reduction without using CCS, if we are going to use fossil fuels. We are still searching for a way in which to get emissions down without hitting affordability and security, to solve the trilemma. So far, the two main ways in which we have tried that have not worked. Subsidising renewables has worked very poorly in getting emissions down and has done so at the cost of affordability. So far, wind and solar have managed to take 1.3% of global energy use, after billions of pounds invested in it worldwide, while having a minimal effect on emissions reduction. So the renewables agenda is putting affordability at risk without achieving its goals.

The other tactic that we have tried is simply to put heavier and heavier taxes on fossil fuels, and we can see the effect of that on our electricity supply in this country. Power station after power station is closing. In the Queen’s Speech debate on 4 June I suggested rather rashly that there was now a risk that Eggborough would close—and now that has come to pass. Therefore we are genuinely looking at a worrying lack of energy security in this country. The two mechanisms we have tried for cutting emissions have either hit affordability or security, so we are still searching for a way to do decarbonisation cheaply and without hitting energy security. The best way to achieve that would be to build more gas-powered power stations and to encourage the use of gas instead of coal, but that is not possible at the moment in this country, because renewables are making it uneconomic for anybody to build or open a new combined-cycle gas turbine.

Is CCS the answer? As the noble Lord, Lord Teverson, has said, it is expensive—we know that; it is a large parasitic load on a power station. We do not yet know for sure that it can work on a large scale, because so far it has really only been tried once in Canada on a significant scale, and it is well behind where we thought it would be by now. If you look up what was being predicted five or 10 years ago there was talk of 20 large CCS plants in operation by 2020. We are not going to be there. However, compared with subsidising offshore wind or rooftop solar, it certainly looks like it will be better value, and it might achieve some decent reductions. In addition, as I say, we will not meet our targets without it. Ten years ago the world relied on fossil fuels for 87% of its primary energy; today it relies on fossil fuels for 87% of its energy. There has been a decline in nuclear and an increase in renewables—they have cancelled each other out.

Therefore, yes—we should find a way to back CCS. The amendment in the name of the noble Lord, Lord Oxburgh, is a sensible idea, because it will avoid the distortions and inefficiencies that will inevitably come from funding CCS through the contracts for difference or another subsidy mechanism. It is quite right that the fossil fuel industry should be incentivised to fund CCS itself. There is clearly an opportunity here in this country specifically, as other noble Lords have mentioned, because of the need to decommission the North Sea. The noble Lord, Lord Oxburgh, is right that that is an urgent opportunity that we need either to grasp or lose.

I therefore urge the Minister to consider linking this to the carbon floor price. The noble Lord, Lord Oxburgh, suggested that the other costs on fossil fuels could come down as that went up. That is probably the way we should think about it, so that we can tell the fossil fuel industry that if it funds CCS, it will not be hit any harder and will see some of those other costs come down. That way there will be a chance of both keeping the lights on and cutting emissions. The Treasury may well object to this, because it likes the carbon floor price as a large money-spinner, I admit, so the Minister will have to fight that battle.

Finally, I add that although we must be careful not to hamstring the fossil fuel industry in this country in relation to its competitors abroad with too much of a CCS requirement, none the less, in the end CCS may be the only way to keep the fossil fuel industry alive. You may think that is a bad thing if you think that fossil fuels are doing harm. However, let us not forget that over the long term fossil fuels have done enormous good for many people and have brought huge benefits to mankind. They have brought light, heat and prosperity, prevented deforestation by replacing wood with coal as a fuel, halted the slaughter of whales by displacing the use of oil, and have banished hunger through gas being used to make fertiliser.

Let us not forget that they have also increased the amount of green vegetation on the planet. We can now measure the carbon dioxide fertilisation effect through satellites and the Normalised Difference Vegetation Index, and we can see that we have had roughly an 11% greening over three years in all ecosystems on this planet. If you translate that into the effect on crops, it is in the trillions. We have increased the value of crops through increasing the CO2 in the air from 0.03% to 0.04%, and have increased the value of crops by some $3 trillion. Therefore fossil fuels do not have anything to be ashamed of, and have much to be proud of. If CCS is the price we have to pay to keep using them, let us use it. The alternative could be to give us an unaffordable or insecure energy supply.

I had not intended to make any remarks about climate change science, but I am tempted to do so because of a couple of things that have been said. I should like to remind the noble Lord, Lord Oxburgh, that, far from moving towards a 4 degree world, let alone by 2030—as that great expert Emma Thompson said on “Newsnight” the other night—the current trajectory, extrapolating the temperature trends of the last 40 years, is for the 2 degree threshold to be reached only in the 22nd century. The 5th annual report of the Inter -governmental Panel on Climate Change confirmed that temperatures are rising more slowly than almost all the models predicted—114 of the 117 model runs overpredicted warming—and stated at figure 1 that, from 2016, it expects 0.1 to 0.23 degrees of warming by 2036. That is at least 3.8 degrees less than Emma Thompson said.

So we do have some time to get this right, and I remind the noble Baroness, Lady Worthington—