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New Clause 1

Part of Energy Bill – in a Public Bill Committee at 10:15 am on 21st January 2010.

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Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change) 10:15 am, 21st January 2010

My hon. Friend, as always, makes an extremely valid point. He is absolutely correct. That is why we must keep reminding ourselves of the centrality of the EU ETS.

Proposed new clauses 2 and 5 envisage the introduction of an emissions performance standard to restrict carbon dioxide emissions from all electricity generation plant. New clause 2 takes a fairly broad-brush, enabling approach, while new clause 5 gives Ministers less discretion over how to proceed and requires a review every three years. Both the proposed new clauses would not only create risks for investment in new coal but could delay or deter investment in new gas generation.

We expect and need significant investment in new gas power stations over the next few years. About 18 GW, about a quarter of current electricity capacity, is expected  to close over the next decade as environmental standards for coal and oil power stations become more stringent and some nuclear plants close. We expect this to be replaced by 20 GW of new capacity that is under construction or has planning consent. But the fact that a project has planning consent does not necessarily mean that it will be built. There is a risk that the regulatory uncertainty created by new clauses 2 or 5 would cause investors to delay investment in new power stations that we would otherwise expect to be constructed over the next few years. That would pose risks to the security of our electricity supply.

I was asked a number of questions about the correspondence with the EU and whether we could do what we told the Committee we would do. The letter from the Commission only specifically refers to its view that an emissions limit value in two particular kinds of permit is against EU law; we believe that we can still use our legislation. More broadly, the Committee should recall that member states have the power under the EU treaties to go further than EU environmental legislation if they deem it necessary to protect their own environment.

I was asked why we did not refer to the letter from the Commission. It was because it was just one element of ongoing correspondence and we have not accepted entirely what the Commission has said. We have written again setting out our final policy and we await a response to that. We do not think it is appropriate at this stage for us to be picking a fight with the EU. We are confident in our own legal advice. We need to continue with the programmes that we think are appropriate and until we are told otherwise, we think the Commission may be content with our proposals. If it is not, then it will be a matter for it to take up legally.