My Lords, the Government believe carbon capture and storage has the potential to play an important role in the long-term decarbonisation of the United Kingdom’s power and industrial sectors.
I thank the Minister for that very short reply. In the Committee stage of the Energy Bill this Session, he stated that,
“CCS is central to what we are seeking to do on decarbonisation”.—[ Official Report , 7/9/15; col. 1230.]
Given the cancellation of the projects in Scotland and Yorkshire earlier this year, is that still the Government’s view, or is this a new vision of CCS and decarbonisation?
My Lords, a decision was taken to cancel the competition rather than the projects to which the noble Lord referred. CCS remains vital to what we are seeking to do in decarbonisation. There are many ways in which we are pushing it forward, not least with industrial carbon capture and storage, innovation and, with our partners, looking at joint research and joint sharing of information.
My Lords, I am sure that the noble Lord, Lord Teverson, is right in theory that, if CCS can be made to work, it will be the means of continuing to burn oil, gas and coal in a low-carbon way and thus preventing the looming power crisis that seems all too likely in the near future, but would not my noble friend agree that, in fact, it is impossibly expensive and that the technique of storing in North Sea oilfields is slightly dubious and not fully proven? Would it not be much better to divert resources, such as they are, to carbon capture and utilisation—a cheaper method of carbon capture and sequestration—and to increased energy efficiency?
My Lords, my noble friend is right to address the enormous cost of the competition. It was going to cost £1 billion. We remain very active in sharing information and data with the United States, Canada, Norway, South Korea, Japan and China, all of which are pushing forward on this, and we are sharing research and information.
My Lords, although methods of capturing and storing carbon are becoming more and more sophisticated, the simplest, pleasantest and most efficient way of doing it is still by the use of trees. Can I urge the Minister to do all he possibly can to urge the Government to apply maximum energy on the care of trees and planting of trees, particularly in our towns and cities?
My Lords, getting back to the cost of CCS, I think at the moment the strike price for it is about three times the reference price, which means that if we went that way, the cost would increase three times. We are hoping the price may come down in the 2020s to only twice the cost, but should we not get on with anything we can to understand that situation and the costs more? As the noble Lord, Lord Howell, said, it may not be feasible at all. It is a surprise to most of us that this competition was cancelled.
My Lords, I agree with most of what the noble Lord said, except about the cancellation. The cancellation was of an extremely expensive project. He is absolutely right that our role, along with others, is vital. We are a leading part of the Carbon Sequestration Leadership Forum internationally and, as I indicated previously, we are talking with key allies about what to do in this area.
My Lords, key organisations have written jointly to the Prime Minister deeply concerned about the Government’s decision to withdraw £1 billion of funding for CCS. This decision is no way to encourage businesses or investor confidence and is undermining the development of a low-carbon economy. Will the Government accept that they have perhaps made a mistake in axing this programme, recommit the funds and come up with a new strategy?
My Lords, I agree with the noble Lord about the importance of CCS, but I disagree with him in relation to the cancellation of the project. As I have indicated, we are looking at other ways of advancing CSS, including an innovation budget, possibly a contract for difference and international co-operation. This is the right way forward with value for money.
My Lords, as the UN’s Intergovernmental Panel on Climate Change concluded, CCS is a hugely important part of tackling climate change, particularly with regard to cost-effectiveness. Without the crucial £1 billion investment in the cancelled CCS project—as the Government themselves phrased it just a year ago—how else are binding carbon targets to be met? I urge the Government to reconstitute the £1 billion pioneering project.
My Lords, the noble Baroness is wrong: it is not £1 million but £1 billion. This is the whole point. It is a massively expensive project. We have to look at value for money and at achieving the best ends for the best value. As I say, we recognise the importance of CCS. That is why we are carrying it forward in so many other ways.
My Lords, I have indicated that it is an issue of value for money. We do not believe that £1 billion spent on a competition is the right way forward. We are spending money elsewhere, such as on industrial carbon capture and storage; we are working with allies; and we have a powerful innovation budget. This is a key area, but we must get value for money.
My Lords, surely this cancellation—this U-turn, this emergency brake—has taken away our reputation as decarbonisation leaders in the world, and has taken away investor confidence in the sort of low-carbon energy projects that we want in this country.
My Lords, anyone who was present in Paris for the conference at the end of the year, post the decision on the cancellation, would recognise that we are seen as having a leading role on decarbonisation. That is the reality.