CCS body for pipelines

‘(1) The Secretary of State may by regulations establish a body or bodies to facilitate the movement of CO2 from CCS-enabled facilities.

(2) The body’s duties may include—

(a) offering long term contracts to emitters to dispose of their CO2;

(b) arranging tenders for companies/consortia to bid for the monopoly rights to operate CCS hubs and to transport onwards and store the CO2 that arrives from the emitting hubs;

(c) organising competitive tenders for the provisions of pipeline capacity, storage and monitoring services;

(d) commissioning research and survey work on the suitability of long-term storage sites;

(e) overseeing the distribution of the CCS levy.’.—(Charles Hendry.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

We are now on the final stretch of this marathon exercise. [Interruption.] I am not quite sure what the Minister said. I think she said it was becoming exceedingly boring, which I hope is not her view about some of the most important energy issues facing our country.

“Enthralling”, perhaps.

I am sure the Minister will clarify. It will get more enthralling by the minute as we proceed into the final hour.

Proposed new clause 13 is about how we give greater impetus to the development of carbon capture and storage in this country. There is frustration within the business community that we have not seen greater urgency attached to the development of carbon capture and to the putting in place of the pilot schemes. There is  frustration about the way the initial competition was mounted, the fact that it ruled out pre-combustion technologies and how long it is taking to choose a winner.

In the course of the Bill, the Government have put in place a levy, so we have a funding system. There are two potential funding systems because we may still be able to work on another. The funding issues are now being addressed and resolved. There is a whole range of other managerial issues about what is necessary to take us from where we are to commercial reality in the development of the plants.

A year ago we asked Lord Oxburgh, former chairman of Shell, to bring together some people from all aspects of industry to look at what was necessary to make the roll-out happen. They included the chief executive of Scottish and Southern Energy, a company that will be producing CO2; the executive vice-president of Shell, a company with expertise in sequestration; Professor Jon Gibbins of Imperial College, who gave evidence and is a pre-eminent authority on the development of the technology; and Tony White, who has tremendous expertise in the financing of such issues.

Those people were asked what was needed to make the roll-out happen, and they concluded that there needed to be an authority to handle aspects of the process. Before Christmas, I provided members of the Committee with a copy of the brief, three-page report that shows clearly why they believe those steps are necessary. The purpose of proposed new clause 13 is to put in place a CCS body responsible for pipelines and associated infrastructure. Lord Oxburgh initially said an authority; we have referred to it as a body, because that gives the Government greater opportunities to decide how best to structure it. Clearly, a case could be made for its being a regulated monopoly, as Lord Oxburgh set out.

The body would be responsible for the development of hubs. We believe that the real potential for the United Kingdom to develop the technology comes from identifying clusters of particularly large use and demand, for example, in the Thames estuary; or where we have particular expertise already, as at the Forth, or a particular amount of CO2 emissions, as in Humberside and Teesside. Those are areas where co-ordination is needed with a body responsible for doing that. There needs to be somebody who will put in place the oversized pipelines and set out the contracts requiring that to be done. It would be absurd to go about CCS with pipelines that were simply the right size for the power stations that would be emitting. If we are to roll it out as a major programme, the pipelines need to be oversized.

There are other contractual aspects in developing CCS and the disbursal of funding, however it is arranged. We think that needs a strategic body, at arm’s length from Government and with the ability to take an overview.

The Government may refer to examples and say, “This will be done by the office of carbon capture and storage,” which, I have to say, has had a frustratingly slow start. Ministers will have often heard me referring to the Office for Nuclear Development, which has been an important way of driving forward investment in nuclear, with an approach orientated towards problem  solving, identifying the challenges and seeing what solutions can be identified. We are not seeing the same drive yet from the office of carbon capture and storage. It may happen, but six months since its announcement the office is not yet up and running. It still has a blank sheet of paper for its objectives and priorities.

Somebody ought to be putting in place a road map; we will shortly come to a vote on the need for a road map for the development of carbon capture and storage. There is a case—as set out by Lord Oxburgh and his unparalleled team of experts—for giving the Secretary of State the power to set up a body to take on the role.

If the Government decided in due course that such an authority was required, it would almost certainly require primary legislation. That is not to say that there must be a body, but that the Secretary of State has the power to create such an organisation. The detail could be sorted out in secondary legislation so that we did not end up, as this time with the levy, with people saying, “How’s it going to be done? We’re under great time constraints”. It could be done in a timely, sensible manner to enable the measure to go forward at maximum speed.

I very much welcome the new clause, for a number of reasons. We now know that there will be four test projects, which is welcome, but if we look at how the pace for clean coal has picked up and gathered momentum over the past year, we see that things are beginning to move quickly. The concept of clean coal, which was seen by many to be a bit of a fantasy a year ago, is now seen by a greater number of people as a real opportunity for this country, especially for the coal industry, which will go to the wall unless clean coal becomes a reality. There are some real issues. We need to move beyond saying, “Is clean coal going to be a real part of our future?” to saying, “What else do we need to do to ensure that it is an effective operation in as short a time as possible?” I therefore welcome the operation.

I want to talk about a couple of other issues, beyond those that my hon. Friend the Member for Wealden raised. There is a real opportunity for oil enhancement. Unless we take action by 2015 many of the oil wells that we will need could be closed down, and we know how difficult it is to maintain them once they have been capped—it cannot happen because the opportunity has gone. The body, if approved, ought to think about that as well. It also ought to think about the impact on our coal communities, and the opportunities it offers them. To areas that traditionally produced coal, setting up the body would bring great hope of a new opportunity for the product they sit on. There are sizeable amounts of energy possibility. We need to talk about that too.

Finally, the proposal would give the message—the most important thing at the moment—that the Government are thinking beyond, “Will clean coal work?”, and that would give people the confidence to say, “This is going to happen”. Clean coal will be an important part of where Britain will be, not over the next 10 to 30 years, but over a longer period, and it provides an opportunity to ensure that people see that there is real export potential, in technology and manufacture. That ought to excite industry as well, and ensure that it is geared up to be a part of what I think will be a movement of major importance for our nation. I support my hon. Friend.  The new clause is important and I hope that the Government will accept it. If they do not, I hope they will do something similar in the near future.

Clearly, the issue is important and it is proper for the hon. Member for Wealden and his hon. Friends to raise it. The new clause is sufficiently drawn to probe how we can have the infrastructure in place to deal with the CCS implications. We need to make sure that it is led by the Government and that they make sure that the private sector, which is trying to fix its own arrangements, puts the grid in place. Given the advice that I have received, I share the view of the hon. Member for Northampton, South that the future of carbon capture in the coal industry will be in three or four significant parts of the country at most. They are all predetermined; the industry is fairly clear about that.

The Thames estuary will play into the Kent coalfields, and the Humber estuary feeds into the Yorkshire coalfields, which my hon. Friend the Member for Harrogate and Knaresborough has referred to in the past. There is also what is described as either the third or the third or fourth area, depending on whether one views the north-east as part of the Scottish sector or not. Part of the industry views the area as the Scottish sector plus the north-east, but calls it Scotland. It is the same area.

There is bound to be collaboration; we have been around that circuit before. We are talking about several companies working and putting their expertise together. We need to make sure that we do not end up with something, driven by a short or immediate interest of the individual company or consortium, that does not play into the bigger picture. That could relate to pipeline size or other things. Everything needs to be integrated.

I am a legatee, as is the Minister of State to a lesser extent, of the decision on where the Jubilee line extension went. The extension was made because it was driven by the contribution offered by and eventually negotiated with Canary Wharf plc after a lot of to-ing and fro-ing by the then Conservative Government. The extension, as originally proposed, was going to be a fast line from places such as Waterloo to Canary Wharf. However, we persuaded people that stopping once south of the river in London Bridge, between Waterloo and Canary Wharf, was a good idea. To put it bluntly, it took a hell of a battle to persuade the then Government and the promoters of the private Bill that we needed stations for the people who lived above the line if a line was to be built disrupting everybody beneath it.

Order. We are straying a little wide of the new clause.

No, I am not. I am being careful to ensure that the example is relevant. There was a hell of a battle, because we had to block the private Bill to make sure that we had the additional stations to meet the general and not just the particular need. I am making exactly the same point in relation to the new clause. We need to get the agreement in place at the beginning, not afterwards.

We need to make sure that a structure is in place that meets the needs of the wider community as well as those of the operators. I will be interested in what the  Minister has to say about that. The debate on the issue will not finish today, but it is sensible that we all work together to ensure that the infrastructure is in place. The new clause is an attempt to ensure that the Government are reading from the same page.

I know that Joan Ruddock has a great knowledge of transport in London. When responding to the hon. Gentleman, however, she should centre on the merits or otherwise of establishing a body at the outset rather than his points about public transport.

Mr. Bayley, you have disappointed me. I was going to explain the merits of the Surrey Canal Road station on the extension of the East London line, for which I am campaigning. I will turn to new clause 13 instead.

The new clause would give the Secretary of State powers to establish a new body, the primary function of which would be to facilitate the transport and long-term storage of CO2 from not just power stations, but all carbon emitters. The new clause provides that the body’s duties may include a range of activities considered necessary to develop a national network for the transport and storage of CO2—for example, organising competitive tenders for the provisions of pipeline capacity and storage monitoring services.

As the hon. Member for Wealden said, his proposed new clause arises from the paper, prepared for his party, that he has kindly circulated to the Committee. The paper raises an important set of issues. I very much welcome the contribution that Lord Oxburgh, with whom I worked at GLOBE International, and others bring to the debate. I will look carefully at the suggestions he makes as we develop the policies required to make the successful transition from the demonstration of CCS to realising its future wide-scale deployment.

However, there are many interrelated and complex issues that need to be understood before we decide how the infrastructure needed for the deployment of CCS can most effectively be developed. Those include how we implement the requirements of the EU directive on geological storage of CO2 to ensure third-party access to storage sites; the approach that might best be taken within the context of the demonstration programme in order to best provide a platform for the further long-term expansion of CO2 infrastructure, including the question of oversizing pipelines; and how we best facilitate the development of the CCS value chain to maximise opportunities for UK business.

In the light of those complexities and our ongoing work to define the scope and role of the office of carbon capture and storage, we are not clear whether a body such as that proposed in the new clause offers the best way forward at this time, nor are we in a position to determine exactly what functions any such body should be given. There are also genuine uncertainties currently about the extent to which CCS will be deployed in the economy and the consequent need for pipelines and storage sites.

Establishing a statutory body whose sole focus is the development of such a network could well be a distraction from our main priority of demonstrating CCS at the present time, and could well lead to considerable inefficiency in undertaking such investment. Our priority is to  demonstrate CCS on a commercial scale and this Government have done more than virtually any other to help bring that about. We are not neglecting the important issues associated with the future development of infrastructure for the transport and storage of carbon dioxide.

As part of our work to implement the third-party access provisions of the EU directive on the geological storage of carbon dioxide, we will take steps to encourage those investing in CCS infrastructure to anticipate foreseeable future demand and also to allow for the expansion of initial investments into the network. We will also publish further thinking on infrastructure shortly in the forthcoming CCS strategy, and then discuss more widely with stakeholders how those might be developed.

I recognise and sympathise with the intent behind the new clause, but to accept it would be premature given the current stage of CCS and the many complex aspects of the framework that will need to be developed and put in place, over the coming years, if we are to realise our ambitions for this technology. Therefore, I hope that the hon. Gentleman will withdraw his new clause, confident in the knowledge that the Government will certainly continue to consider the issue.

I was just talking to my hon. Friend the Member for Leominster and saying, “Who was the American President who used to talk about the ‘vision thing’?” I think it was the first George Bush, although it could easily have been the second George Bush.

What comes through is the lack of vision. Some of the steps taken by the hon. Lady will be read by people outside here. They will accept that the Government have done one thing: the great compliment paid to the Minister and the Government is about the step forward on the levy system, which people say was a potentially world-leading approach.

However, there is also frustration. People will say, “Where is the rest of it? Where is the rest of the package that is really going to drive this forward and make it all happen?” My hon. Friend the Member for Northampton, South made extremely valid points about some of the wider implications. It is important that we move forward so that we can address issues such as enhanced oil recovery and the additional benefits that it will bring.

We must recognise that if something does not happen soon, it will be too late because the fields in question will have closed. It is important to bring hope and help to coalfield communities and to present them with a better, brighter future. We want this to be a technology that brings extraordinary gain to parts of Britain that have had a difficult period over recent years. We totally understand those difficulties and we want to see those communities revitalised and investment returning to many different parts of our economy.

The Minister’s approach seems to be characterised by her taking a little step here and another one there, rather than having an overall strategic approach and asking, “What do we really need to do to send a signal to some of the biggest companies in the world, which are looking at this, that we are determined to move from a position of following to one of leadership?” This is not just an issue of funding; it is about the whole  structure that needs to be put in place, not only to conduct the competitions but to take the process beyond that point.

The hon. Gentleman does a disservice to his own arguments by suggesting that we are followers, not leaders, in this matter. We are widely acknowledged in the world community to have a leading role. If we are successful in getting the Bill through the House, it will put in place a framework funding mechanism and enable us to go ahead with a programme unprecedented anywhere in the world. That is real ambition, and everything that the hon. Gentleman wants us to do can be done regardless of whether a body such as the one that he proposes exists.

The hon. Lady has been rather partial in the evidence that she has accepted from those who appeared before us. Jeff Chapman, of the Carbon Capture and Storage Association, did indeed say that the levy system was one of the best in the world, but he was also asked which countries had moved ahead of Britain, and he said:

“There are a number of countries. The USA certainly has extensive plans with support arrangements already in place. Canada has three projects which were between the time that the funding was announced in total, and the projects were selected through competition and allocated.”

He also said:

“The first commercial size power project in the world may well be in China. The second one may well be in Abu Dhabi.”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 38, Q77.]

It is simply not true to say that we are still leading the world. We are leading the world in talking about this, but we are not leading the world in delivering it.

I want to send a message to people who are looking to invest in this technology that we are thinking about all of it and how the whole jigsaw fits together. Although the funding system is, of course, crucial, there is also a need to look at the overall strategic vision and ask how we intend to deliver the technology as we start to make progress.

The hon. Lady talked about decisions on pipelines that need to be made. I refer her to what Tony White said in his evidence:

“An overall organisation could take the judgment that a nine-inch pipe would do for one plant, but that if there is another plant nearby that will come on later, a 14-inch pipe should be used. By being able to anticipate where the demand will come from, such an organisation would not fall into the problems that the National Grid has had of being unable to anticipate where generation will come forward.”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 46, Q98.]

It is that overall strategic vision that we think important—working out who should be doing what and by when, to make everything happen.

We will do all we can to support the development of this technology in Britain. We see it as being incredibly important. The Chairman of the Energy and Climate Change Committee has often spoken about the big difference that it can make for us. We feel that we are creeping forward when we could be moving with much greater drive and determination.

I remind the hon. Gentleman that, as I have said, there will be a CCS strategy, which will be published in the foreseeable future. He needs to suspend his judgment until that has been produced.

The hon. Lady has made her point. We have tabled a new clause to meet the need for a road map, and an obligation and a time scale—six months—for that to be produced. I hope that she will support that because, for a Government facing an election in a few months, six months must be well beyond the foreseeable future.

The argument comes back to vision and strategy, and to having a real sense of trying to make a difference, so that companies around the world will say, “Look what they are doing in Britain. There is no doubt that this is the most exciting place to do it.” However, if the hon. Lady had come with me to many of the meetings with the companies, she would have heard the frustration about the slow progress. We want to move forward to make a real difference, which our measure can. Therefore, I shall press the new clause to a Division.

The Committee divided: Ayes 5, Noes 9.

Question accordingly negatived.