Carbon Capture and Storage — [Sir David Amess in the Chair]

Backbench Business – in Westminster Hall at 1:30 pm on 19 October 2017.

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Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland 1:30, 19 October 2017

I beg to move,

That this House
has considered carbon capture and storage.

I thank the Backbench Business Committee, chaired by Ian Mearns, for granting this debate, and the sponsors who helped to secure it, particularly my hon. Friend Peter Aldous and Anna Turley, whose support is deeply appreciated. I also thank the team at the Energy and Climate Intelligence Unit for their help and Sarah Tennison at the Teesside Collective for her excellent advice. I congratulate the Minister on the production of the clean growth strategy and I support its core message that there does not have to be a trade-off between green energy and economic growth.

As the Minister noted in her announcement to the House last week, since 1990 the United Kingdom has simultaneously grown its economy by almost 70% and reduced its emissions by more than 40%. I also welcome the commitment that the UK will continue to be a world leader in creating clean technologies, jobs and businesses.

Chiefly, I am delighted with the new resolution to demonstrate international leadership in carbon capture, usage and storage. The benefits of carbon capture and storage are multiple. CCS will be essential in ensuring that the UK meets its legally-binding target to reduce carbon emissions by a minimum of 80% on 1990 levels by 2050 in a cost-effective manner. That was the conclusion of the Energy and Climate Change Committee, which warned that without CCS the UK

“will not remain on the least cost path to our statutory decarbonisation”.

That has been echoed by other leading authorities. The Intergovernmental Panel on Climate Change estimates that without CCS, the cost of meeting global climate change targets could increase by 138%. Similarly, the Committee on Climate Change believes that

“carbon capture and storage…has the potential to almost halve the cost of meeting the UK’s 2050 target.”

It warns that the additional costs of inaction on CCS for UK consumers could be £1 billion to £2 billion a year in the 2020s, rising to £4 billion to £5 billion a year in the 2040s.

The economic benefits of CCS stretch far beyond the cost-effective attainment of our carbon budgets. According to the House of Commons Library, CCS could create 60,000 jobs in the UK, not to mention the greater number of jobs that could be saved by avoiding the decline or closure of carbon-intensive industries, for which it will quickly become progressively less viable to remain in operation in the UK as levies on carbon emissions increase. Those industries emit carbon dioxide as an intrinsic part of their production methods, so regardless of how much we decarbonise our power supply, they will continue to be huge emitters. As the North East of England Process Industry Cluster, which represents the chemical industry in the north-east, warns,

“on current trends and policies, industrial emissions reduction will only be met through the closure of industry.”

That would be a totally avoidable catastrophe and we need to do everything in our power to prevent it, and that means developing CCS.

The International Energy Agency estimates that there will be a global CCUS market worth over £100 billion. With even a modest share of that market, UK gross value added could increase to between £5 billion and £9 billion per year by 2030. The wider economic benefits and opportunities presented by CCS are huge, whether in the form of increased domestic manufacturing activity, a more positive balance of trade, or the possibility that UK carbon storage sites could generate income by storing emissions from other countries.

When it comes to the location for CCS, hon. Members will be unsurprised to learn that I think there is a natural choice: Teesside. That judgment is not born of the bias of someone who was born and grew up there, and is very proud to represent it, but based on a number of unique advantages that our area has to recommend it as a prime site for CCS development.

First, Teesside is home to nearly 60% of the UK’s energy intensive industry. Regional emissions per person are almost three times the UK average. Fully rolled out, CCS on Teesside would therefore have a substantial impact on overall UK emission reductions.

Secondly, Teesside has one of the highest concentrations of industry in the UK. That includes the specific and unique mix of companies that comprise the Teesside Collective. That group has come together with the excellent Tees Valley combined authority to drive the case for CCS investment in the area. The group includes Sembcorp Utilities, the area’s leading energy supplier; SABIC, one of the world’s largest makers of chemicals, fertilisers and plastics, whose Teesside operations alone emit 1.25 million tonnes of CO2 every year; Lotte Chemical UK, which manufactures the plastic needed for soft drinks bottles; BOC, which produces more than half the UK’s hydrogen; and CF Fertilisers, the UK’s largest ammonia fertiliser plant.

That integrated cluster is so important because the emissions from those facilities can be captured, mixed with emissions from a power station in the same area, and transported and stored together. Analysis by the Green Alliance found that this approach would reduce the cost per tonne of carbon captured by about two thirds, compared with the cost of doing it for a power station alone. The mixture of companies would also allow a test project to assess the cost of CCS when facing different levels of difficulty in the removal and extraction of carbon.

Thirdly, the cost of CCS would be further reduced by Teesside’s close proximity to North sea storage sites. A fortnight ago, I had a fascinating briefing from Professor Jon Gluyas and Simon Mathias of Durham University at Boulby potash mine in my constituency. The UK storage appraisal project, which concluded in 2013, identified some 600 storage locations on the UK continental shelf—enough to store our direct emissions for the next 130 years.

Photo of Neil Parish Neil Parish Chair, Environment, Food and Rural Affairs Committee, Chair, Environment, Food and Rural Affairs Committee

My hon. Friend mentioned nitrogen fertiliser and the need to use carbon capture and storage to help create more fertiliser. At the moment we use a lot of natural gas to make this fertiliser. Therefore, it will be a win-win situation, because we will be reducing the amount of natural gas we use and using the carbon that is already being produced.

Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland

I agree with my hon. Friend that carbon utilisation is something we should look at. It is not necessarily the same as carbon capture and storage, but it is definitely a valuable mechanism to ensure we are not wasting carbon dioxide that we have to produce. Therefore I would certainly back that, as does the strategy.

Fourthly, Teesside is the prime location because developing industrial CCS would create an additional 1,200 jobs during its construction phase and help create and retain a further 5,900 jobs when in operation. That is vital in our area, where, as Opposition Members will attest, despite the huge progress that has been made, too many people are struggling to find secure and well-paid jobs. The Teesside workforce have the strong engineering skills required for CCS, largely as a result of long-standing expertise in the oil and gas, energy supply, and chemical and process sectors.

Finally, and perhaps most importantly, Teesside is ready to go. The Teesside Collective is ready to commence front-end engineering design—FEED—studies immediately and could be capturing and storing CO2 in just six years. No further research or innovation is required. The Teesside Collective has already presented a cost-effective finance model to Government, which sets out an attractive business case for both Government and industry to invest in a demonstration phase.

Last week, the Minister told me that Teesside makes a very powerful case for the funding set out in the clean growth strategy, of which £100 million has been committed to support CCUS innovation and deployment in the UK. That is greatly welcomed. She said that pints would be available for myself and Alex Cunningham, and I think she could be included in the round as well. However, can the Minister provide clarity as to what proportion of that investment will be spent on carbon capture and storage specifically, as opposed to carbon capture and utilisation, which was referred to by my hon. Friend Neil Parish? Although I can understand the rationale for investing in carbon utilisation, such as its relative ease of development and more direct economic gains, it does not allow us to store the same amount of carbon dioxide as carbon capture and storage, which I believe is the real prize.

In relation to CCS, specifically CCS on Teesside, I ask the Government to take three critical steps. First, just as the Government established the contracts for difference mechanism, which is the incentivised investment that led to the huge cost reductions we are witnessing in green energy, so too the Government need to come up with an incentive mechanism for industrial CCS. What would that look like in practice? There are two elements. We need a transportation and storage solution, and the Government need to state their intention to agree a financing mechanism. Stakeholders tell me that those are the two most important things they are asking for, without which there can be little practical progress on delivering CCS in the UK. The Teesside Collective very much hopes that such a model can be developed and agreed in 2018 and it has already done really impressive groundwork.

Secondly, please deliver FEED funding for a trial industrial CCS network on Teesside. The Teesside Collective has requested the relatively modest sum of £15 million to get a demonstration project under way and it hopes that that can be allocated in 2019. Government support for the deployment of such a strategic demonstration project will enable CCS to reduce costs significantly if and when it is built at commercial scale in the 2020s.

Thirdly, we need to establish the facts to show the rest of Government and the public why this matters so much. In its April 2017 report on CCS, the Public Accounts Committee stated:

“By the end of 2017, the Department should quantify and publish the impact across the whole economy of delays to getting CCS up and running, and of it not being established at all.”

Will the Minister inform us whether such analysis has been commissioned and, if so, when the Department will publish the results?

Those are my three asks, which I sincerely and deeply hope are deliverable. I have come into politics to try to help deliver many things: a stronger economy; a world that we can pass on to our children in better shape than we found it; and a change in people’s perceptions of Teesside and what it has to offer our country and our world. I am an unashamed evangelist for the latter, as are so many of the people who work there. Carbon capture and storage would allow us to deliver all those objectives. I urge the Minister, as I urge all colleagues: let us seize this opportunity, and seize it today.

Photo of Anna Turley Anna Turley Labour/Co-operative, Redcar 1:41, 19 October 2017

It is a pleasure to serve under your chairmanship as always, Sir David. I thank Mr Clarke for securing this debate and for his powerful contribution.

Carbon capture and storage is a technology with huge importance for our industry, energy and our climate challenges. It has huge potential to bring investment and jobs to Teesside, which is why I am so pleased to be joined today by so many colleagues from the Tees valley area. I welcome the shared cross-party ambition to see the UK leading the way by introducing CCS into our national infrastructure.

Following the clean growth strategy, which the Government published recently, I hope that this debate will help to reinforce the case for making progress. Earlier this year, I pressed Mr Hurd—the then industry Minister—on the need for some clear Government leadership to help to get the technology off the ground, and I am delighted to see the process reignited in the clean growth strategy and the promise of a CCS demonstration project. I sincerely hope to see that responsibility granted to the Teesside Collective in my constituency—a project ready and waiting to start decarbonising UK industry.

Meeting our commitments to reduce emissions under the Climate Change Act 2008 and the Paris agreement while protecting and expanding British industry is a serious challenge. The fifth carbon budget commits to a 57% reduction from 1990 levels by 2030. The easiest and most cost-effective solution to this challenge is, without doubt, CCS.

Research by the Committee on Climate Change has shown that CCS could virtually halve the costs for the UK of meeting emissions targets. The UK is especially well placed to be a leader in the industry, not least because of storage space in our depleted oilfields just off our coasts, but the clock is ticking. The UK has fallen down the Global CCS Institute’s readiness index in the past two years, due to a

“lack of clear CCS policy”.

The Committee on Climate Change has also been clear that we must develop this technology in the coming years so that we are ready for a full-scale operation in the 2030s.

There is also an urgent need to stay competitive with our continental partners, which is particularly important post-Brexit. In fact, getting ahead on CCS could be the competitive edge that we need to attract inward investment. If we delay, we will see that investment lost to other countries who get ahead. For example, this year Norway announced the award of contracts for full-scale carbon capture at cement, ammonia and waste-to-energy plants. In 2016, Toshiba completed construction of a carbon capture facility at a waste incineration plant in Saga city, and the world’s first large-scale carbon capture facility in the steel industry was launched in Abu Dhabi. The Dutch Government have committed to CCS and handling 20 million tonnes by 2030 from industrial sites. Rotterdam is one of the biggest industrial zone competitors, so it is vital for Teesside to get ahead.

The difficulties we have experienced in the steel industry, where energy cost pressures are higher than those faced by our European competitors, are a warning of what is to come if we do not get serious about industry decarbonisation. As my neighbour, the hon. Member for Middlesbrough South and East Cleveland, has mentioned, our region has huge CCS potential. The Teesside Collective project could become one of Europe’s first clean industrial zones.

Yesterday, I attended the launch of the South Tees mayoral development corporation’s strategic masterplan for the future of the former SSI steel site. At 2,000 acres, we have a once-in-a-generation opportunity to attract global investment and to become a hub for new industries and technologies. We could genuinely create a world-renowned site for clean industry with CCS at its heart.

Teesside is home to nearly 60% of the UK’s major energy users in the process and chemical sectors. The internationally renowned North East of England Process Industry ClusterNEPIC—represents chemical-based industries in the region, but particularly those concentrated in Teesside. The sector generates £26 billion of annual sales, £12 billion of exports and is the north-east’s largest industrial sector. BOC, one of the Teesside Collective partners, operates the UK’s largest hydrogen plant, which produces over half the UK’s hydrogen. If we are to convert our gas grids to hydrogen—as Leeds is currently exploring—CCS on Teesside would need to be a key part of that decarbonisation strategy. Another Teesside Collective partner, Lotte Chemical, produces plastic for the soft drinks industry. CCS could capture over 90% of its carbon output, essentially decarbonising the soft drinks materials supply chain.

The density of our industry makes us a heavy emitter of carbon dioxide—it is three times the national average and accounts for more than a fifth of all UK industrial emissions. That makes us especially vulnerable to uncompetitive energy prices and carbon price pressures relative to other countries, but it also makes us a prime candidate for CCS, because the technology could drastically cut a very significant proportion of UK emissions. If we combine that with our close proximity to the North sea industry and potential storage sites in depleted oil fields, it means that Teesside would be one of the most efficient and cost-effective locations for a test case. The technology would help us to maintain and even enhance the comparative advantage we already have in chemicals and process industries. Or, to put it another way, without support to decarbonise our industry, we risk seeing the problems at the SSI steelworks happen in our other sectors.

NEPIC estimates that the use of CCS could create and safeguard almost 250,000 jobs by 2060, and 7,000 new jobs could be created in Teesside for the building and operating of facilities alone. The House of Commons Library estimates that CCS could sustain up to 60,000 jobs and deliver a £160 billion economic boost by 2050 if it is delivered along the east coast. Teesside is ready and waiting to face the carbon reduction challenge and could be capturing and storing CO2 within six years.

The Teesside Collective has costed engineering for three industrial plants and presented to Government the business case for an initial CCS hub in Tees valley. Its proposals are for a cost-effective introduction strategy, with companies capturing and storing 11 million tonnes of carbon dioxide over 15 years. That would then expand to include power stations and more industrial companies as the network demonstrates its worth. It estimates that a pilot could repay up to £31 million a year to the Government in carbon savings.

The Government have understandably been concerned about cost and value for money for the taxpayer, which unfortunately led to the disappointing decision in 2015 to cancel the £1 billion CCS competition. I am glad that the Government have changed their view and recognised that CCS is a technology where, for relatively small up-front investment, greater savings in reducing carbon can be made down the line.

The Oxburgh review noted that investing in CCS now would deliver the lowest cost to the consumer and that heavy costs would follow if it kept being delayed. I truly welcome the Government’s commitment of £100 million in the strategy, and I hope that some of that will support the £15 million FEED—front-end engineering design—study requested by the Teesside Collective. The Oxburgh review suggests that CCS on a power station could be constructed at a cost of £85 per megawatt-hour under state ownership, which is lower than Hinkley Point’s £92.5 per megawatt-hour. Those costs would be even lower for industrial clusters. Analysis by Green Alliance, for instance, suggests that costs in that context could be cut by two thirds, making it comparable to wind and solar power. The Teesside Collective already has two industrial plants producing pure CO2 and therefore requiring no additional capture facilities at all.

The important thing is that business and Government work together to devise a sustainable funding model that does not place unsustainable costs or risks on the partner business or consumers. One crucial element missing from the clean growth strategy is the lynchpin for starting any major CCS project in the UK: work on transportation and storage. The report of the parliamentary advisory group on CCS stated:

“The lowest cost CO2 storage solution for the UK at the scale required will be offshore geological storage in UK territorial waters.”

The group also cautioned:

“The state will need to take an enhanced role in managing storage risk if costs are to be minimised.”

Teesside is well placed for that, given its location and links with the oil industry, but work needs to start on developing the infrastructure soon, so that a cost-effective model can be found.

As the Government acknowledge in the clean growth strategy, the success of the offshore wind cost reduction taskforce provides a good model for the cost challenge taskforce on CCS. However, as NEPIC has argued, that success was based on Government investment through a clear marketplace and a funding model that provided the certainty that investors need. Both the Oxburgh review and the Green Alliance report recommend contracts for difference or similar for financing the storage infrastructure to achieve that.

The strongest message that I want to send to the Government is: let us get moving on this as soon as possible. The Public Accounts Committee cautions that the UK has already missed opportunities, and we cannot afford to lose any more. It is crucial for our energy and climate strategy, but it is also a chance for Britain to take a world lead in a cutting-edge industry, future-proof our industries, protect jobs and create new ones. Teesside stands ready and willing to get to work and make it happen.

Photo of Peter Aldous Peter Aldous Conservative, Waveney 1:50, 19 October 2017

It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend Mr Clarke on securing this debate. His timing is spot on, given the publication last week of the clean growth strategy.

We last held a debate in this Chamber on carbon capture and storage on 24 January. From my perspective, the outcome of that debate was disappointing, but nine months on, I believe that we are in a much better place. A framework is beginning to emerge within which carbon capture and storage in the UK can become a major industry, and we are learning lessons from the aborted second CCS competition.

I believe that the Government are studying closely the proposals in the noble Lord Oxburgh’s report of September 2016. I was on his advisory committee, which heard the evidence, drafted and approved the report, and I believe that it is a good blueprint for the future. We see carbon capture and storage as fitting in well with the 10 pillars of the Government’s industrial strategy; it ticks all the boxes. Finally, the publication last week of the clean growth strategy provides the much-needed road map that business is looking for in order to invest time and money in carbon capture and storage.

Invariably in debates such as this, Back-Bench MPs have an ask of the Government, which we look to the Minister to take on board and respond to. However, from my own perspective, with the publication of the clean growth strategy last week, the Government have, to a large degree, shot my fox. I shall briefly set out the case for CCS and why it is so important that it is at the heart of the UK’s industrial strategy.

The UK has legally binding commitments, set out in the Climate Change Act 2008, to reduce carbon emissions by a minimum of 80% from 1990 levels by 2050. As the Intergovernmental Panel on Climate Change and the Committee on Climate Change have both pointed out, if we do not deploy CCS, it will be very difficult to meet that target cost-effectively.

The UK has a unique selling point that means we should be at the vanguard of the CCS movement. It is the thing that most colleagues in this room have in common, in that our constituencies adjoin it: the North sea. I believe that your seat also adjoins it, Sir David. In the North sea and the UK continental shelf, the UK has its own large, safe and secure offshore CO2 storage vessel, in the rocks deep beneath UK territorial waters. It provides us with the least-cost form of storage on an industrial scale. Over the past 50 years, as a result of the development of the North sea oil and gas industry, the UK has acquired enormous expertise and experience that can be harnessed to deliver CCS.

Photo of Ross Thomson Ross Thomson Conservative, Aberdeen South

Will my hon. Friend join me in acknowledging and welcoming that the University of Aberdeen has world-leading experts at the forefront of research into carbon capture and utilisation? It is reflected in the fact that Aberdeen was the only UK university whose entry into the Carbon XPRIZE was accepted. It is developing technology to help create a solution to the damage that CO2 can cause, such as using what is left as materials for furniture and so on. Does he welcome and acknowledge that?

Photo of Peter Aldous Peter Aldous Conservative, Waveney

Yes, I do. I am happy to acknowledge it. We have enormous, significant expertise across the UK. I am sure that all of us in this Chamber can highlight institutions in or near our constituencies that can and should put us at the vanguard of the low-carbon economy and its global development over the next few years.

As I was saying, the UK has acquired enormous expertise and experience in the oil and gas sector, which can be used to deliver CCS, create jobs and—most importantly for the Government—generate revenue for the Exchequer. However, as Anna Turley highlighted, time is of the essence. We need to get on with it. As a result of the lower oil prices that have prevailed for the past three years, the North sea is going through a period of transition and restructuring. We must move quickly to use assets that otherwise might be prematurely decommissioned.

As we have heard, CCS has an important role to play in delivering growth across the whole UK and in bringing jobs to coastal communities, which in recent years have faced particular challenges with the decline of traditional industries. There are areas where clusters of energy-intensive industries are based—such as Scotland and the north-east on Teesside, as the hon. Member for Redcar highlighted—which could benefit significantly from CCS. That might not be the exact situation in my own constituency, but we have businesses in East Anglia that are part of the North sea supply chain, whether in oil and gas or in the emerging offshore wind sector, and that would benefit from the development of CCS.

The industrial strategy highlights the importance to the UK of cultivating world-leading sectors and being global pioneers in industries in which we have an advantage. CCS is one of those industries. We have the resources and the skills. It is an industry in which we can not only secure inward investment but, in due course, create significant export opportunities, building on the expertise that my hon. Friend Ross Thomson mentioned a minute ago.

On the resources and skills required for CCS, Norway is a country with which we have a great deal in common.

Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland

On that point, we have had disappointing news from Norway this week. I spoke to the Teesside Collective to discuss what was going on there. It is important to put it on record that although the Norwegians have retreated somewhat in the scope of their ambition for when things will happen, they have not pulled out of CCS altogether. Effectively, they have found themselves in a minority Government situation—we can perhaps empathise—and that has made certain investment decisions rather harder to achieve, so they are looking to make them on more of a case-by-case basis. That is why the news has come out of Norway in the way that it has.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

I am grateful to my hon. Friend for that intervention. I talked this morning to representatives of Statoil, who emphasised that they are proceeding with CCS and that the situation is, dare I say, a fact of life with minority Governments.

We have a great deal in common with Norway. The Norwegians are also taking forward CCS, and they are slightly ahead of us. However, I emphasise that it is not a question of CCS taking place either in the United Kingdom or in Norway; it should be in both. We need to collaborate between our two countries to ensure that that takes place on the best possible terms and at the lowest possible price.

On that point, cost is the elephant in the room. CCS has foundered on this particular rock in the past, and I am sure that there are some who say that it will do so again. However, I do not believe that that will be the case. The Oxburgh report showed that in the right circumstances, CCS can be delivered at £85 per megawatt-hour. It is also important to highlight what has happened in the offshore wind sector. Costs have decreased in the past three years from around £140 per megawatt-hour to just under £60. That has been achieved by the Government providing the framework for the delivery, and by the industry getting on with the job and building, rather than just talking.

With the clean growth strategy, the Government have provided a framework for CCS to develop. I look forward to more details from the Minister about the road map for turning this exciting vision into a practical reality. Doing so will not only make the world more resilient to climate change, but transform places and—most importantly —people’s lives.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions) 2:00, 19 October 2017

I am grateful to the Backbench Business Committee for granting this debate, and to the hon. Members who persuaded it to do so. It is a particular pleasure to follow my co-chair of the all-party parliamentary group on carbon capture and storage, Peter Aldous.

My interest in the Government’s new approach to CCS in the clean growth strategy goes wider than Teesside, but I am pleased that new colleagues from our region are present, including Mr Clarke and my hon. Friend Mike Hill. They join the work that many of us have been doing for years to persuade the Government to get serious about CCS. I am surrounded by no fewer than five Teesside MP colleagues; 100% of us are here, and we are 100% behind the debate.

I hope my new Tees colleagues recognise that the Government’s reaffirmed commitment to CCS, two years after withdrawing £1 billion in funding, is only a small step along what will be a very long road if our country is truly to reap the benefits of carbon capture. We need more than tens of millions in investment; we need billions. We need big leaps, not tiny steps. Nevertheless, this new recognition of CCS is testimony not only to the impressive body of evidence that continues to emphasise the key role of CCS in delivering least-cost decarbonisation, but to the energy—no pun intended—and enthusiasm of the industry, which has kept up a steady drumbeat on CCS since November 2015. I pay tribute to the Carbon Capture and Storage Association for its work and for its support of the APPG.

In the clean growth strategy, the Government have recognised what the industry has been saying for years: CCS is vital to broad sections of the UK economy. Power aside, key industries such as steel, cement and refining are increasingly looking for ways to remain competitive in a low-carbon world. CCS offers the only solution for deep decarbonisation in these industries that helps to enable their sustainable future, which is crucial for regions such as the Humber, the north-west and Teesside.

Photo of Paul Williams Paul Williams Labour, Stockton South

CF Fertilisers is based in my hon. Friend’s constituency, Stockton North, but also employs people in my constituency and in Middlesbrough. My hon. Friend Andy McDonald has a long-standing commitment to carbon capture and storage, but cannot be present because of a Front-Bench commitment.

Photo of Paul Williams Paul Williams Labour, Stockton South

My mistake.

CF Fertilisers uses as much gas every year as the city of Manchester. Does my hon. Friend Alex Cunningham join me in calling on the Minister to acknowledge that carbon capture and storage is very much part of the future of CF Fertilisers?

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. Having recently been at a meeting of the Panel of Chairs, I remind new Members that if they wish to intervene they must be present at the start of the debate. However, I know that Dr Williams spoke in the main Chamber earlier, and I realise that he cannot be in two places at once. Nevertheless, as a Clerk is sitting beside me, I thought I should point that out.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

My hon. Friend Dr Williams was indeed in the main Chamber earlier. So was I; I was in the smoking debate, trying to persuade our country to give up the weed.

I agree entirely with my hon. Friend. The company he refers to consumes the same amount of gas at its other plant in Runcorn. It is crucial that CCS be spread across the country.

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

May I address that question now, in case I forget later? Dr Williams is right to focus on the effect on companies such as CF Fertilisers. He will be pleased to know that I had a meeting with that company yesterday. We have had conversations on several issues, but the impact of this technology on its carbon dioxide emissions and its cost base is clear.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

I thank the Minister for that helpful intervention. I have seen companies across the area, including those that make up the Teesside Collective, working hard to decarbonise their processes, but engineering can only do so much. The Government appear to understand that. The clean growth strategy estimates that CCS could provide almost half the required emissions reductions in energy-intensive industries, helping them all on their way.

A recent study by Summit Power gives a simple explanation as to why the first CCS projects must begin operation in the 2020s: achieving the CCS capacity needed to meet the UK’s 2050 target requires a 30-year build-out rate. Any attempts to significantly shorten that period would place unrealistic expectations on the supply chain and the construction companies. The end result would either be a failure to meet the 80% target by 2050 or the deployment of alternative low-carbon solutions that are likely to be considerably more expensive. We need the first CCS projects to begin operation in the 2020s. Although the £100 million of funding to support that work is welcome, the Government will need to do much more if we are to realise our ambitions.

The Government’s recommitment to CCS sets out an ambition to deploy it at scale during the 2030s, which throws up some interesting questions. What exactly is meant by “at scale”? Does it mean deploying the first CCS projects in the 2030s, or does it mean that the projects will be up and running in the next five to 10 years and at the required scale 10 years later? To achieve large-scale deployment of CCS in the 2030s, it will be essential to have at least one phase, if not two phases, of operational projects in the 2020s to enable learning and cost reduction.

That was just one of the messages from yesterday’s APPG meeting, where we heard about CCS progress in three fantastic projects that could be the first building blocks in the construction of a world-leading CCS industry: the Caledonia Clean Energy project, the Teesside Collective and the Liverpool-Manchester hydrogen cluster. They are all in a strong position to get work under way to deliver projects that could be expanded or replicated with relative ease.

The Department is familiar with those projects and is providing some support, but the message to Government at that meeting was clear: each of the projects is costed, demonstrates relatively low cost and, most importantly, could make something happen quickly. The projects have invested heavily in development, worked with leaders in the field and done the numbers. Their plea was for the Government to come up with a timetable for decisions.

The Teesside Collective spells out what it needs in its briefing note, which the hon. Member for Middlesbrough South and East Cleveland alluded to. It asks for the allocation of £15 million in capture plant FEED funding to enable it to develop phase 1 of the project. It wants support for investment in a suitable CO2 store. It states that transport and storage costs will come down through new delivery models and that it is keen to work in partnership with Government to look at a cost-effective solution. It also wants the establishment of a funding mechanism to build and operate an industrial CCS network.

Will the Minister address those pleas and let us know what decisions we can expect from her? The industry desperately needs decisions. I invite her to attend a meeting of the all-party group early in the new year so that she can outline the Government’s thinking, listen to Members’ feedback and answer their questions.

I hope I will be forgiven for being a bit more parochial now. As other hon. Members have mentioned, NEPIC has identified Teesside as a location with a particularly strong competitive advantage in the deployment and commercialisation of CCS. My Teesside constituency is home to the Teesside Collective, a consortium of industries developing the first CCS project in the UK. Teesside has the workforce and the strong engineering skills required for CCS, largely as a result of long-standing expertise in the oil and gas, energy supply, chemical and process industries.

We know from the clean growth strategy that CCS has to do more than demonstrate carbon reduction and low cost. It also has to offer a competitive opportunity for the whole of the UK. There is every reason to believe that that aim can be realised. The UK has some of the best CO2 storage capacity in the world, a world-class oil and gas industry with the ideal skill set for CCS, and industries already located together in key regions. The economic benefits of CCS could be immense, with the Summit Power report concluding that developing it in the UK could deliver an estimated £129 billion of benefits. The clean growth strategy includes a commitment to developing a deployment pathway for CCS in 2018, but there is no detail about how that pathway will be developed or about the actions that may be included, so I hope the Minister can help us in that regard.

To make sure that, come the 2020s, the first CCS projects are operational, the Government need to implement a number of key actions in this Parliament to kick-start CCS clusters in a number of key regions. Countries such as Norway and the Netherlands have come forward with strong commitments on CCS, and it is time for us to step up and take our place among the leading group of countries that are developing this transformational technology.

I am ambitious and optimistic about the potential that exists and I am encouraged that we seem to be moving in the right direction. However, in closing I reiterate three messages: we need huge leaps to be taken, not tiny steps; the Government need to publish a timetable for the decisions needed to make real progress; and there are good, costed projects ready to go that can make our country a world leader in carbon capture and in creating and protecting countless jobs. I hope that the Minister will help us do that.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy) 2:11, 19 October 2017

It is always a pleasure to serve under your chairmanship, Sir David.

I congratulate Mr Clarke on leading today’s this debate and speaking so eloquently about the benefits of carbon capture—and, of course, on throwing a strong pitch for his own constituency into the mix as well. In fact, all Members in this debate have spoken about the benefits of carbon capture, so I will not cover the ground that others have already covered, apart from perhaps touching on a couple of the points made. I will concentrate more on the policy.

As we know, carbon capture and storage has huge potential for decarbonising fossil fuels and it could be highly effective in reducing greenhouse gas emissions, as we have heard from many Members today. However, it was telling that, in the last contribution, Alex Cunningham referred to “tiny steps”, because that is indeed what these are: tiny steps on the way.

In Scotland, the SNP Scottish Government are already consulting on a new climate change Bill, with proposals—along with interim targets for 2020, 2030 and 2040—for a 90% reduction by 2050. That is as far as the reduction can go under current scientific advice. The independent expert advice from the Committee on Climate Change has said that that is the limit of feasibility and at the moment there is not enough evidence to set a net zero target.

However, I would caution the hon. Member for Middlesbrough South and East Cleveland. If he is successful and gets a promise about an installation, there is an elephant in the room. It is not the white elephant of Hinkley Point, which I will refer to later; it is the elephant that is Peterhead, where there was a shameful decision by the UK Government to pull the plug on a long-planned development. Peterhead is not far from the Aberdeen South constituency and it is where we saw a hugely damaging decision being taken, without warning, that will create a legacy that will deter investment incentives and dent consumer confidence.

That decision was a manifesto betrayal. That should be key—it was in the Conservative manifesto that the project would go ahead, and the cost to the taxpayer was £100 million. Peterhead was set and ready to accept a £1 billion contract and expected 600 jobs. I would therefore caution the hon. Gentleman about getting too excited about any promises, because by axing that project at the 11th hour, George Osborne committed what can only be described as a betrayal of the people in Peterhead.

Even now, the commitment to CCS, welcome as this small U-turn is, is still fairly mealy-mouthed, because in the detail it says: “subject to cost reduction”. That is the bare minimum of commitment, and the Carbon Capture and Storage Association has pointed out that it is counter to the way that technology actually develops. We have to invest in order to get the experience to get the drive costs down, so it is very difficult to see how an energy policy cherry-picked in this way, with these announcements and selected U-turns, will really provide a cohesive way forward for the industry. And all the while, in the background, we have the expensive and regressive nuclear policy at Hinkley C.

The SNP Scottish Government support the Paris agreement’s zero-emissions aim and we are providing significant funding in Scotland to establish the feasibility of the Acorn CCS demo project at St Fergus. Incidentally, that project is also supported by EU science funding of €1.9 million, and with SNP Government support the low carbon and renewable industry has created 58,500 jobs. That was the figure in 2015, which was up by a third from 2014.

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

I know that the marching orders for the SNP, if not always for the hon. Gentleman himself, is that its Members have to be as gloomy as possible about everything at all times, but it is, frankly, really very sad that he has made no reference today to the high-wind offshore floating wind plant, which is one of the most innovative and creative things that is being done. It is being done by the UK Government, because this area is not a devolved matter, as he knows. That has been done because of the combination of the policy, Government leadership and work with industry to drive down the costs of offshore wind, exactly as we propose to do with this technology. Let us focus on what can be delivered and acknowledge that no country in the world is taking a major step into unreformed CCUS at the moment, and we want to do this together, so perhaps we could have just a bit more cheerfulness from north of the border.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

I am grateful to the Minister for her short speech, or lecture, about how we should look at Government policy. I believe it is quite common now for us to be told that we should just hope for the best—that we should all be doing a “rah-rah” and saying, “This is all going to be great in the future”. No amount of deflection from the Minister will get away from the point that the UK Government, at the 11th hour, cancelled the Peterhead project, with no warning to the people involved, and that is shameful. On the point of the floating wind farm, which was launched yesterday, she will be aware that Nicola Sturgeon was there, not only to welcome the project but to launch it officially.

By making these policies—by making these small U-turns and small concessions—the Government are doing some welcome things. However, we want to see further, more significant U-turns. We want to see a significant investment, because, as has been stated, it is time for a long-term, robust UK policy for a low-carbon future. That is needed urgently. I urge the Minister to come up with some actual details about what the Government are going to do in the future to deliver it.

Photo of Mike Hill Mike Hill Labour, Hartlepool 2:18, 19 October 2017

It is a pleasure to speak under your chairmanship, Sir David. I am grateful to Mr Clarke for securing this debate. As an MP who supports climate change initiatives and the reduction of carbon emissions, I am pleased that the Government are now recommitting to CCS as part of their clean growth strategy, in order to meet legally binding targets.

I am proud that in Hartlepool we are already one of the main suppliers of low-carbon energy to the national grid, and EDF is developing green technologies around the production and supply of electricity for a future beyond the life of the nuclear power stations.

While I am pleased that such work is being undertaken, I recognise that where we have more traditional coal and gas-fired power stations, we need to act swiftly to reduce emissions. CCS is a proven technology that can do that. The Tees valley has been identified as one of two energy-intensive industry clusters that would benefit from the development of CCS technologies. Further, our expertise and experience of working with the offshore oil and gas sector put us in prime position as a region to develop technologies for the use of depleted oilfields for the purposes of carbon storage.

I commend the Tees Valley combined authority, which is made up of four Labour council leaders, the Labour Mayor of Middlesbrough and the elected Tees Valley Mayor, Ben Houchen, for their efforts to secure CCS pathfinder status for the Tees valley. Success would not only bring much-needed jobs but much-needed investment into the area. If we are serious about meeting environmental targets, we must invest in initiatives such as CCS. As an industrial base located on the coast, Hartlepool and the wider Tees valley area are best placed to meet those needs.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy) 2:20, 19 October 2017

It is a pleasure to serve under your chairmanship, Sir David. Like other Members, I congratulate Mr Clarke on bringing forward this debate. He promoted Teesside and highlighted the possible economic benefits of CCS, including to the energy-intensive industries located there.

I had started to wonder what the Teesside Collective was. Before I came into the Chamber, I understood that it was the consortium looking to develop the project, but it is quite clear that the name could be applied to the Members gathered in Westminster Hall, because there is no doubt that they spoke with a unified voice. It is good to hear cross-party support fighting for jobs in constituencies, and it is to be applauded.

As Peter Aldous said, this is the second debate on CCS in this Chamber in a 10-month period. That shows how valuable CCS is deemed to be for climate control and emissions reduction. The debate has been somewhat more upbeat and optimistic than the debate in January, but I warn the Minister that, just like my hon. Friend Drew Hendry, I reserve the right to apply a bit of gloominess to the issue.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

Before the hon. Gentleman introduces further gloom to the debate, perhaps he would like to welcome, as I did yesterday, the fact that the Caledonia project in my home country is working very closely with the Tees Collective project in my adopted home. It is co-operation between projects that will capture the imagination of the Government and others and drive things forward.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

Yes, I welcome that collaboration and announcement. The hon. Gentleman made a joke about being parochial for his area and his constituency, but surprisingly I am not going to be that parochial. I would like to see all these projects develop, with local areas across the United Kingdom benefiting.

The hon. Gentleman talked about taking tiny steps forward. We need to take much bigger leaps forward—this is where I turn to the gloomy aspect that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey touched on—but we have taken backward steps. The Minister might not like hearing this, but it is important, and it has got us to where we are just now. Pulling the plug on the Peterhead project cost the Peterhead area 600 jobs, but it has the much wider implication that it dented investor confidence. The Government need to take action to recover that confidence and find ways to get private investment going forward.

In 2014, before the Scottish referendum, we were told by the Better Together campaign that only the broad shoulders of the United Kingdom could cope with a reduction in the oil price. Since then, we have sadly seen a reduction in the oil price, but we have not seen enough support from those broad shoulders. That is why the pulling of the project at Peterhead was a further blow to the oil and gas industry in that area of Scotland. That project could have been the perfect fillip.

Photo of Ross Thomson Ross Thomson Conservative, Aberdeen South

Does the hon. Gentleman accept that the White Paper on independence was wrong when it talked about the proceeds from oil and that the Deputy First Minister John Swinney was wrong when he said that there would be a second oil boom? As we are talking about U-turns, will the hon. Gentleman join me in calling on the First Minister to perform a U-turn on scrapping the energy jobs taskforce, because that is needed to support jobs in Aberdeen?

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

I thank the hon. Gentleman for that intervention and for talking down the oil and gas industry in his area. Yes, the Scottish Government’s predictions in the White Paper had the future price of oil wrong—just like the UK Government and the Office for National Statistics had it wrong. The Scottish Government were somewhere between the two. We were not the only ones who got it wrong; economists got it wrong too. We admit that we got it wrong, but it is why the SNP has long argued for an oil fund, because that would have helped to smooth the trough that came. I am happy to acknowledge that point and put it on the record.

Returning to where I was going to go, the decision to pull the plug on Peterhead had wider implications for investor confidence. It has been acknowledged and was repeated in the clean growth strategy that risk was an issue with these projects, but in the previous competition the real risk was the White Rose project, where the contractors involved could not apportion risk between themselves properly and could not provide a compliant bid. In the Peterhead project, Shell was able to manage the risk. The Government need to review that and find out why Shell said it could manage the risk and provide a compliant bid. That has important implications going forward.

The National Audit Office report compiled after that decision confirmed that a total of £168 million was spent on the two CCS competitions with no tangible research and development outcomes to show for it. The Government may suggest that the contractors or personnel involved in the projects developed some expertise, but there is no guarantee that they will be involved in future projects. There is a risk that they will take their expertise elsewhere. That is why we need to go forward quickly. Following the decision on Peterhead, there has been the withdrawal of funding for onshore wind and solar power, which has caused problems in those sectors, leading to a 95% drop in expenditure on renewables. There is a clear pattern, and I highlight that to remind the Government that investor confidence is low and it must be stimulated. They need to find a way forward.

The Government can find ways forward to manage risk. In the Thames tideway project, they underwrote risk to the value of £5 billion. Hinkley Point C had bonds of £2 billion underwritten, not to mention the fact that the National Audit Office estimates that the project will cost £30 billion. We must remember that, unlike the other contracts for difference awards, Hinkley has a 35-year lifespan and not the standard 15. It is clear that where there is Government will, there is a way. They need to find that will and way for carbon capture and storage. The hon. Member for Waveney talked about the Oxburgh report, which highlights that CCS can deliver an estimated strike price rate of £85 per megawatt-hour. That compares favourably with £92 per megawatt-hour for Hinkley.

Other Members have highlighted the estimate of the Committee on Climate Change that CCS could halve the cost of meeting the 2050 carbon reduction target. In that respect, I welcome the clean growth strategy, which the Government brought forward last week. As I said at the time, however, the strategy gives mixed messages. It states that CCS will be deployed subject to cost reductions, but we need clarity. What are the Government’s cost expectations and what is the expected trajectory once the initial project is up and running? We need to remember how that compares with the “sign at all costs” attitude taken towards Hinkley. The Government also need to state clearly how they expect CCS to be paid for. Members from Teesside have highlighted the need to find a suitable and robust payment mechanism that gives value for money.

I welcome the Government’s statement in the clean growth strategy that they

“will work with the ongoing initiatives in Teesside, Merseyside, South Wales and”— importantly from our perspective—“Grangemouth”. However, they need to clarify what “work with” means. What is the real level of support that they will provide? It needs to be more than working with or providing token support. As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey highlighted, the St Fergus project in the north-east of Scotland is being supported by the Scottish Government and EU funding. When it comes to EU funding, what future funding are the UK Government going to allocate beyond the 2020 horizon? How do they see collaborative working going forward?

Due to the abrupt pulling of the previous competition, at great cost to the public purse, not only was the National Audit Office report undertaken, but the Public Accounts Committee also undertook an investigation. It made a number of recommendations; hopefully the Minister will advise us on how the Government will take them forward. First, the Committee recommended that the Government

“set out in its Industrial Strategy the role that CCS can play”.

I am not sure that there is enough detail in the industrial strategy on that yet. The next recommendation was that

“By the end of 2017, the Department should quantify and publish the impact across the whole economy of delays” to CCS and of its not having been implemented yet. The Committee recommended that an

“Emissions Reduction Plan should set out a clear, joined-up strategy for deploying CCS”.

It also said that the Government need to look at different risk options for energy policies, that the Treasury should buy into the emissions reduction plan at the outset and that there is a need for less Treasury interference—the Department for Business, Energy and Industrial Strategy must actually make the decisions, rather than the Treasury intervening.

I hope that the Minister will respond to that, and advise whether the carbon capture, utilisation and storage cost challenge taskforce that is to be put forward will consider those aspects. I welcome the setting up of that taskforce. Will she also confirm how experts will be selected and incorporated into the taskforce, and what the terms of reference from the Government will be?

It is laudable that the clean growth strategy reiterates that we want to see the implementation of CCS. As Alex Cunningham asked, what does large-scale CCS in the 2030s mean, what is the pathway to that, and what projects do we need to see on board before then? The mention of supporting hydrogen production is also laudable; that is certainly a good way forward. I would also highlight the fact that Scotia Gas Networks is looking to run demonstration trials up in Scotland, to see how that will work in a domestic setting.

It is laudable to say that the UK aims to be a global leader, but to be a global leader we need to lead from the front. We need financial commitment, drive and determination, and we need to see a clear way forward soon. I look forward to hearing the Minister’s response.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy) 2:31, 19 October 2017

Surrounded as I am by what we now know is a Teesside collective, who look out on to the North sea, I cannot offer quite such a spectacular view from my constituency. I have a view on to the English channel, which is of course rather less bracing for a dip this time of year, but does not share the North sea’s potential for CCS in the future.

It was good to hear this afternoon from Members across the House about that potential, in terms of what is in Teesside—both in its own right and in conjunction with what is in the North sea. As a country, we must play a role in, among other things, making sure that after the exploitation of the North sea for oil and gas, the industry continues. That can be done by ensuring that the plant, the connections and the various other things currently in the North sea are turned around over the coming period, so that we are the leading country in Europe and the world for storing carbon as well as capturing it—perhaps offering that facility to not only our own country, but all the countries bordering the North sea and more widely.

In that context, it is interesting that that is precisely where Norway is now going. Statoil has been fairly busy recently; I met with its representatives just the other day. It was good to hear from them that although there have been setbacks in the process of getting the Norwegian project under way, it is very much still on track. The aim is to develop the Troll field, essentially as the first part of a European-wide process of storage of carbon in the North sea. They are currently looking at processes of barging captured carbon to an onshore site in Norway and then pipelining it out.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

The development in Norway is an illustration of why the UK needs to get on its bike and get moving. Yesterday, at the all-party parliamentary group meeting, it was revealed that the cost for projects in this country might be as low as £40 or £60 a tonne, but going to a third party might cost us £100 a tonne. That is an economic argument in favour of our own comprehensive storage.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

My hon. Friend has exactly anticipated, in rather more eloquent terms, what I was about to say almost immediately. The pace of the Norway project illustrates that we should get our act together as early as possible in making sure that we have the lead on the whole process in the North sea, for all the reasons that my hon. Friend mentions—cost, expediency and proximity. This unparalleled opportunity will probably not come again. If, for example, we close down all the capped wells and sites in the North sea as the oil begins to diminish, we will have lost that opportunity to be world leaders in the North sea. Action needs to be undertaken now, or in the very near future.

I endorse everything that has been said by pretty much everybody in the Chamber today about the importance of carbon capture and storage for the future. I cannot do better than describe it in the exact words of the Committee on Climate Change:

Carbon capture and storage (CCS) is very important in meeting the 2050 target at least cost, given its potential to reduce emissions across heavy industry, the power sector and perhaps with bioenergy, as well as opening up new decarbonisation pathways (e.g. based on hydrogen).”

The committee goes on, in that report, to talk about the cost of not doing anything as far as carbon capture and storage is concerned over the coming period, which hon. Members have discussed.

The Committee on Climate Change sees carbon capture and storage as absolutely essential. That is what it said in its report, “The Fifth Carbon Budget”, which we in the UK have now adopted. It is incumbent on us to make sure that we respond to what the committee has underlined in that report—the importance of carbon capture and storage.

On that matter, I have been pleased to see that the clean growth strategy not only mentions but more than mentions what will happen with carbon capture and storage. Just a little while ago, the Minister told us in the House that the clean growth plan would be on its way shortly, with further bells and whistles. I would like to think that that mention—all three pages of it—may be a bell or whistle that she personally inserted into the clean growth plan to get a new view abroad of what we can get from carbon capture and storage, how important it is for the future and what the next pathways are.

I cannot be wholly uncritical, because certain things need to be underlined at this stage. Opening an avenue on carbon capture and storage will inevitably be seen by many people concerned about the area as springing from something that hon. Members have also mentioned this afternoon—the shameful passage in our recent history of the cancellation of the two carbon capture and storage pilot projects at the very last moment, in 2015. The cancellation of those projects was not just a tragedy and a disaster for the communities involved in them; it spread a pall of doubt and concern across the whole of the industry about whether carbon capture and storage has a future, whether it is worth investing in and whether confidence can be restored to make it go forward, as we all want. We have to tread a path back to the starting line, and I hope that, given the intentions about carbon capture and storage set out in the clean growth strategy, the Government understand what that setback has done to us and find a way to get back to the starting line. There are a lot of measures in those three pages, which suggests that that can be achieved.

I am not sure whether the £100 million—or, to be precise, up to £100 million—that has been set aside for the next phase of the development of carbon capture and storage will be remotely sufficient to get us where we want to go. I hope that, in 2018, when the Government come forward with more plans and details about how the £100 million will be spent and what will happen to it—the clean growth plan assures us that they will do that—the next stage of the road map will set out what we will put in over the next period to make carbon capture and storage work properly and ensure we reach the carbon reduction goals set out in the fifth carbon budget.

In that context, we ought to pay more attention to the excellent report on carbon capture, usage and storage by the Oxburgh commission, of which Peter Aldous was a member. Although the clean growth strategy says that that advisory group’s advice influenced the Government’s thoughts on carbon capture and storage, the report sets out the investment that is likely to be needed for carbon capture and storage over the next period, and it is substantially more than the £100 million set out in the clean growth plan. It would be helpful for the Government to provide a formal response to that report, which they have not done hitherto, to put on the record which parts of it they think are important, which parts they will try to implement at an earlier stage and which parts they will leave for later. I will leave that thought with the Minister. That would be a very positive thing to do, in the light of what was put forward in the clean growth strategy. We must be clear about the path ahead of us, and we need to learn from the report’s very good insights.

I hope the Minister notes the cross-party agreement in this Chamber about the urgency of the need to develop carbon capture and storage, about the development route we need to take, about the key role that Teesside and the North sea will play in that process, and about the need to work together to realise the carbon capture and storage goals that are so necessary on our path to carbon reduction.

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth) 2:44, 19 October 2017

As always, it is a great pleasure to serve under your chairmanship, Sir David.

I thank my hon. Friend Mr Clarke for securing this excellent debate, to which there have been many thoughtful, detailed and factual contributions. My hon. Friend is a strong proponent both of the technology and of the area he represents. It was wonderful to hear the unanimity of views, in particular from Anna Turley, who speaks so passionately on behalf of her constituency; Alex Cunningham, who made a very factual contribution about the importance of this technology; Mike Hill, whose predecessor also promoted the technology; and my hon. Friend Peter Aldous, who, although not from the region, represents a coastal constituency and has a long-standing interest in this issue. As always, he spoke very well on this subject.

I tweaked the tails of the hon. Members for Kilmarnock and Loudoun (Alan Brown) and for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) slightly. I understand their points, but I sometimes wonder whether we do not have more solar deployment in Scotland because listening to the Scottish National party might lead us to think that the sun never shines north of the border, whereas we all know that it does very frequently. They made a fair point about the criticism that has been levelled at previous decisions, and that criticism has made me determined to find a copper-bottomed means of taking this technology forward. We all accept, and the report is clear, that it should be in our decarbonisation mix, but we need to develop it in a way that meets our triple test: it must ensure maximum decarbonisation, offer a clear route to an acceptable cost level, and help us boost the UK’s technology leadership so we grow the number of jobs in that part of the economy and our export potential.

I will try to answer all hon. Members’ questions. As always, some will not get answered, but I am sure my excellent Parliamentary Private Secretary, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), will be assiduous in capturing any that are not answered and making sure that I answer them further down the line.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

The Minister talked about fact-based speeches. Does she accept that the costings for the projects I alluded to are good costings and demonstrate good value for money?

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

I have not reviewed those particular costings. As the hon. Gentleman knows, I am never without my calculator. If there is one thing I want, it is value for money and a clear route to cost-effective deployment. Hopefully, we all want to go down that path.

It was excellent to hear cross-border, cross-party support for this technology. That is the way to boost investor confidence and ensure the clean growth strategy survives the vagaries of the political cycles. These long-term decisions benefit both us and our children and grandchildren.

All parties welcomed the clean growth strategy, and I thank their representatives for that. We are coming at this from a position of strength. We have the best decarbonisation and growth performance of the G7 economies. We are all determined to capture the enormous opportunity from the global pivot to low-carbon economies, and we want to ensure the UK’s productivity benefits from it. The strategy is broad and binding. It sets out clear targets and harnesses the power of innovation, on which we lead the world, to drive down costs and increase the pace of the roll-out of innovation. It also clearly sets out how we intend to meet some of the challenges.

Carbon capture, usage and storage is a vital part of the strategy. It is needed as a long-term strategic option so we can deliver the 2050 target at the least cost. It is crucial that we cut emissions from sectors that are hard to decarbonise. CF Fertilisers has done an excellent job in taking as much carbon as possible out of its industrial processes, but we understand that producing that vital product is carbon-intensive.

Carbon capture, usage and storage also gives us optionality. The hon. Member for Kilmarnock and Loudoun talked about the opportunity to decarbonise hydrogen production, and it is important that we maintain that option as we move towards our low-carbon future. As my hon. Friend the Member for Middlesbrough South and East Cleveland argued so well, capturing and effectively deploying this technology enhances the competitiveness and productivity of industrial regions such as Teesside, Merseyside, Grangemouth and south Wales. I do not want anyone listening to this debate to be in any doubt that, although some areas may be leading in terms of their ability to promote themselves as places to use this technology, that does not rule out other areas. We want it to be deployed effectively in all parts of the UK where there are industrial clusters.

The technology represents an export opportunity for firms such as Shell and Costain and new UK technology providers such as Carbon Clean Solution, which was funded by the Department for Business, Energy and Industrial Strategy to develop globally leading new forms of carbon sequestration for industrial processes.

Many companies are involved in the supply chain as well. I have been following with great interest the Eight Rivers plant, because it is UK-developed, completely breakthrough technology. It is funded with UK Government money deployed in Texas because of the package of incentives put around it, but the supply chain to the plant involves venerable companies such as Goodwin in Stoke-on-Trent, which is an amazing leader in high-specification metallurgy, and Heatric in Poole, Dorset. If we can capture such opportunities onshore, we bolster our onshore supply chain and, as the IEA has estimated, the global CCUS market could be substantial.

The problem, however, is this: we all accept that CCUS is important—we had some conversation on the nervousness in Norway about doing this—but while 21 CCS plants are operating at scale in the world, 16 are dependent on the revenues from enhanced oil recovery, which suggests that for only five plants on the planet has someone been able to persuade a Government or local player to subsidise the technology substantially, despite the potential of such technology. That tells me that the cost of the existing technology is too high and that there are potentially ways to deploy it more effectively.

That is why I want to change things—this is the point made by Dr Whitehead—and it is very much a personal commitment and something I strongly believe is exceptionally important. That is why we have put in place a much broader strategy on CCS. We want the prize of global leadership in the area: we want to be the people who break the deadlock, deploy CCS in the UK and capture the export opportunities.

We therefore have three areas in which I have set out actions under the clean growth strategy. First, we will constitute the CCUS cost challenge taskforce rapidly, because the model worked extremely well for offshore wind where we all accepted that the existing costs were too high. I take the point about risk sharing—the hon. Member for Kilmarnock and Loudoun is knowledgeable about this. There is a real question as to how much risk partners were able to accept in that structure. We are keen to probe our understanding of how to get down the cost of the deployment of the technology, so the new taskforce will be constituted in the next month. It will report to me and, as with the green finance taskforce, it will be set specific challenges to come up with ways to reduce the cost.

Secondly, we will publish a deployment pathway for CCUS over the course of the next year, which will include the points made about—I cannot read my own writing here—power capture, industrial capture, and transport and storage. We want specific delivery and investment models for each of them. We will continue to progress the work we are doing with the Teesside Collective, but will also work with other initiatives in Teesside, Merseyside, south Wales and Grangemouth, because there are other opportunities to do so and to learn from.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Work and Pensions) (Pensions)

I very much welcome the commitment to a timeline over the next 12 months. That is extremely welcome, and I wanted to say it specifically, but what else will the Minister do to help build the investor confidence to ensure that we can get the investors to put the money forward to make the projects happen?

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

The hon. Gentleman has pre-empted what I was going to come on to, although I am conscious of the time and that I have to leave some for my hon. Friend the Member for Middlesbrough South and East Cleveland. For example, I too am meeting Statoil today— I am doing the rounds and going straight from this debate.

I am very conscious of the opportunities to work with organisations such as the Oil and Gas Climate Initiative, which for the first time is deploying new funding specifically into this area. We are very keen on substantial private sector investment. We are talking for the first time to the gas turbine blade manufacturers, who have never been involved in the conversation but who clearly depend for their long-term business survival on continuing to generate power with gas.

Internationally, I want to be sure that everyone is aware that we are perceived as a technology leader. We participate in Mission Innovation and its carbon capture innovation challenge. We are already exploring collaborative working relationships with countries such as Norway, which has an excellent Energy Minister. Collectively, between our two countries, we took the hydrocarbons out from under the North sea; surely there is cost-effectiveness in co-operating to put back the CO2 we have extracted. Given budget constraints, Norway in particular bears some interest, but there is also interest in working together in the United States, Canada and Australia.

We will therefore keep investing in our international CCUS programme and will organise and host an international global carbon capture, usage and storage conference next year to affirm that this is an area in which we want to take international leadership. We want to be the movers and shakers in this field.

As we have made hon. Members aware, we will invest in innovation to support such technology through our £100 million industry and CCUS innovation programme. We will make up to £20 million available for a CCU demonstration programme; we will support the next generation of technology; and in particular, as we talked about, we will support CCUS in some of the further out technologies, especially those to do with the removal of greenhouse gases. To ensure that that all works, I will personally chair a new CCUS council with industry to review progress and priorities.

I want hon. Members to be in no doubt that we are making a fundamental doubling down, as it were, on our commitment, but the guideline is that we must come up with a more cost-effective way of doing CCUS. We have to ensure that we produce the maximum reduction in emissions and we want to position the UK as the global technological leader in this space. That is at the heart of the clean growth strategy.

I will be delighted to attend the APPG and I am happy to have the conversation. As hon. Members should know, my door is always open. I feel that collectively—I choose the word advisedly—we are much better together on this sort of technology. The more we set aside any political differences, the more we ensure that we are perceived as a great place for investors—that would be great.

Sorry, I have one point to finish on quickly. I was asked about the response to the Public Accounts Committee. We accepted a majority of its recommendations, but we did choose to reject that one because, for one thing, it was based on outdated cost analysis. We want to convince everyone—I hope we have done—of the Government’s commitment to move forward on CCUS. I do not feel that we need to demonstrate its importance because that is already accepted.

I want absolutely and sincerely to say how impressed I am with the work of the Teesside Collective, which has made an exceptionally powerful case to be the first place to move forward with this technology. Discussions are very active, but it would be a bold Minister at my level who set out funding commitments ahead of the publication of the industrial strategy or the Budget. However, the case has been made, and made so well that—forgive my lapse into urban slang—I wonder whether “Teesside Massiv” might be more appropriate than Teesside Collective. It is a powerful force, and it is wonderful to see so many colleagues from all parts of the House making the case.

Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland 2:57, 19 October 2017

It has been a pleasure to serve under your chairmanship today, Sir David. This has easily been the most pleasant debate that I have experienced in my short time in this House. I hope that it marks a new era of consensus in our politics.

We have heard about the fierce urgency of “now” when it comes to seizing the moment for CCS. In a powerful speech, Anna Turley set out her long-standing commitment to delivering this technology, rightly alluding to its potential significance after Brexit. My hon. Friend Peter Aldous made a typically thoughtful speech, welcoming the progress that has been made this year and referring in particular to the opportunities for coastal communities—including his own in East Anglia—that form part of the supply chain. Alex Cunningham has made a huge contribution to the pursuit of CCS for Teesside—for our new “massiv”, which may take me a while to get used to—in his role as the chair of the APPG, where I am delighted that the Minister will join us in due course.

Drew Hendry—I hope I did not just mispronounce his constituency, or at least that I have not endangered the Union in so doing—made a passionate case for the Peterhead site for CCS, and that was echoed by my hon. Friend Ross Thomson. I entirely agree that there must be no more false starts. This is surely the line in the sand and I think we have heard enough today to suggest that it will be.

Mike Hill—my mother is also from Hartlepool; she is also a monkey hanger—rightly referenced the key role his town has to play in our green revolution. Alan Brown, in a very generous tribute to the work of the Teesside Collective, rightly emphasised the benefit of delivering all the viable projects, including those in Scotland. Dr Whitehead is a hugely informed Opposition spokesman who has done so much on this issue down the years. He rightly praised the Oxburgh review and there is a lot to learn from that.

In closing, I thank the Minister for her personal commitment to making a success of CCS. Her speech was thoughtful and really helpful. It was great to hear about the taskforce and the deployment pathway. We have a great ally in her and I look forward to working with her, and with all colleagues who were here for this debate, as we move forward in the years ahead. I think we are on the cusp of something very special.

Question put and agreed to.


That this House
has considered carbon capture and storage.