Energy Bill

Public Bill Committee, 12 January 2010.

Written evidence to be reported to the House

Clause 1

Peter Atkinson (Conservative, Hexham)

With this it will convenient to discuss new clause 15—CCS Roadmap—

‘(1) The Secretary of State shall lay before the House a programme and timeline for the delivery of at least three carbon capture and storage demonstration projects.

(2) The Secretary of State shall present this programme and timeline within six months of Royal Assent for this Act.’.

Charles Hendry (Conservative, Wealden)

Good morning, Mr. Atkinson, and thank you for chairing our discussions this morning. We are glad to have started the formal sittings on the Bill. As we have previously said, the Bill has important elements. There will be an opportunity to highlight further some of the areas where additional changes need to be made, but there is much that we significantly support and wish to speed through into legislation.

Clause 1 starts us on the process of assessing how we debate carbon capture and storage. Significant steps are proposed in the Bill and many of us see them as overdue. In the evidence sessions last week, which we listened to with great care and which were extremely helpful, we heard people constantly saying that they welcomed the changes being introduced. However, I think it is fair to say that there was frustration throughout at the delays experienced so far in trying to take forward carbon capture in Britain.

I turn to some of the comments made last week. Jeff Chapman of the Carbon Capture and Storage Association said:

“It is a great pity that it has taken such a long time to get to the point that we are at now. We could have got here more quickly. The Energy Bill is extremely welcome from that point of view.”

When asked about whether other countries had moved ahead of the UK, he said:

“There are a number of countries. The USA certainly has extensive plans with support arrangements already put in place for a number of projects. 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. It took less than a year, so compare that with the time scale that we have just been talking about and obviously we are slipping behind. The first commercial size power project in the world may well be in China. The second one may well be in Abu Dhabi. This Energy Bill is an opportunity for the UK to regain the lost ground. We must seize this opportunity and move on with it.”

Then we had Professor Jon Gibbins, one of the foremost authorities, who said:

“We are maybe five years behind where we could be”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 37-43; Q75, 77 and 92.]

The impact of those delays has been very significant indeed.

We also heard evidence from some of the major companies involved, and they made it quite clear that the delays had had an impact on Britain. The reason for highlighting that is that there is now a great sense of urgency—we all feel it—about trying to give Britain leadership on this and recapturing some of the lost ground. David Mannering from RWE said:

“If it takes four to five years to build the plant and it is a case of how long is a piece of string to get the planning consents, I guess one would be looking at a minimum period of about seven years, so 2017 would probably look more realistic.”

That looks more realistic than the Government’s original time scale of about 2014. In addition to that, we heard concerns expressed by Dr. Keith MacLean of Scottish and Southern. He said:

“There was no shortage of ambition to move forward with this technology. The limitations that were put on through the competition rather stifled it.”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 22, Q43 and 45.]

So what we heard very clearly last week was that there has been an enormous amount of leadership in Britain on speaking about carbon capture, but we have not seen the sort of leadership necessary actually to take it forward; we have seen that global leadership position eroded as other countries have moved ahead of it. We now need to recognise where those past mistakes have been in order to move forward.

It was a mistake, earlier on, to rule out pre-combustion from the Government competition. That was very serious because it meant that a number of projects that were most advanced in Britain—indeed, most advanced in the world—got scrapped, and we heard from people last week about how those will not be coming back. We heard from E.ON and others that the projects they were looking at have either been delayed indefinitely, or scrapped completely. There has been a lack of focus on trying to drive that forward and, according to Professor Jon Gibbins, there has not been enough focus on collaboration. Too much has been required of companies working on their own, without seeing how they can combine their expertise and knowledge to give Britain the necessary lead in this area. That has led directly to the loss of some of the groundbreaking projects in this country.

There is continuing potential to make further mistakes, and the Bill does not address that. I hope that through the course of the Committee we manage to address some of those issues and perhaps make the Bill even more valuable. There is a continuing lack of co-ordination. We know the Government’s plans for the levy, but we do not yet know how they want to take forward the process of co-ordinating that work, which is going to be challenging indeed. I hope that the Government will review favourably the very valuable work done by Lord Oxburgh.

There continues to be a lack of strategic oversight. A number of people giving evidence to us last week talked about the need for oversized pipelines. It has always been my view that if each new carbon-generating facility is required to have its own pipeline to its own sequestration facility, it simply will not happen, because the cost will be unaffordable. Therefore, what one should look for in the legislation is a steer towards oversized pipelines to develop cluster approaches, so that we can have great centres of CCS technology—realistically, I am thinking of the Thames, the Humber and the Forth—where we can show that those technologies can be groundbreaking.

There is still a lack of clarity for investors, which is why we have tabled amendments and new clauses, as have Liberal Democrats and some Labour Members, on the emissions performance standard, which we all think will provide that extra clarity for investors. Concern has also been expressed about the nature of subsequent support, going beyond that which is initially proposed in the Bill. The fact that it says that the Government “may”, rather than “will”, provide support has clearly caused concern for potential investors.

We heard from Sara Vaughan of E.ON last week that the company is worried that it might start a pilot project, with perhaps a quarter of it covering CCS, then later face a requirement to retrofit CCS to the remaining part. It simply does not know whether there would be Government support available for that or not. It is not saying that there should or should not be; it is simply saying that greater clarity is required to persuade its board in Essen that it should be making that sort of investment.

We also heard from Sara Vaughan about the nature of the Government’s rolling review on coal. There is a general welcome for the fact that the Government are looking at how coal can be encouraged to play an important part in the energy mix, but there is concern that the findings in 2018, which she referred to, could result in the plug being pulled on CCS. There is not enough clarity in the Bill to set out the implications for people if that were to happen. Would the money that they had received be drawn back? Would they be expected to continue with that plant with all their own funding? What would happen—would they be closed down if they did not meet an emissions performance standard level? There is a range of questions requiring further answers from the Minister if we are to have the necessary clarity to attract investment into these areas and into the United Kingdom.

I hope that, when responding, the Minister will say more about her approach on clusters. It makes a great deal of sense to have a cluster approach—to look at where there are natural areas of massive demand for energy, or areas where CO2 is going to be produced. London is an example of where there will be great demand; the Humber and perhaps Teesside are examples of where a great amount of CO2 will be produced. In addition to that, the project proposed by Scottish Power at Longannet in Scotland is the furthest ahead. All those offer great potential for clusters for CCS technology to be developed. I hope that the Minister will clarify that a bit further for us.

We have tabled new clause 15 because there is simply not enough detail in the Bill about how CCS works forward. The history of the Government’s energy policy has been to have a mass of targets without road maps of how they are to be delivered. We have had a target for the eradication of fuel poverty in vulnerable households by 2010. We have also had a target for the deployment of 10 per cent. of our electricity from renewables by 2010, for the deployment of 10 GW combined heat and power by this year, for the reduction of carbon emissions by 20 per cent. by 2010 and for the insulation of 6 million homes by 2011.

All those targets are looking extremely hard, if not impossible, to meet because the Government have never set out a road map for what is necessary at each stage to achieve them. If we want CCS to work and the UK to have real leadership, we need a clearer sense of direction and a clearer understanding of whose job it is to do what and at what time.

I make a comparison here with the Office for Nuclear Development. When the OND was set up, with the objective of having the first new build nuclear plants operating by 2017-18, it had in place a clear road map. It knows—and everyone else knows, as it is published on its website—whose job it is to do what each month to keep on target. If things are not being done, it can discuss what needs to be done to get things back on target or whether the target needs to be revised.

We need such an approach in a host of other areas of energy policy. Given today’s focus on carbon capture, in new clause 15 we have proposed that there should be a road map of how we will get the plants up and running in the next few years; it is far too challenging to leave the issue purely to the market and to chance. We need a sense of Government leadership, to give people the chance to invest where necessary.

The new clause is designed to be constructive and helpful. It would give the Bill extra rigour and give industry extra confidence. It would show that, rather than just talking about the issues, the Government have a clear process in mind for how they intend to deliver the projects. I am pleased to note that the Government have followed the recommendations that we made a year or so ago about setting up an office for carbon capture and storage, but that office is not functioning in the same way as the Office for Nuclear Development. It has good people involved in it—of that there is no doubt—but it has to be set up on the same basis, with the same direct reporting line to Ministers, the same powers and the same authority. At the moment, it simply does not have those. If we have a road map in place, as suggested by new clause 15, we can show the same commitment to carbon capture and storage as we have shown towards nuclear technology.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am grateful to the hon. Gentleman for giving way. He is giving our debate an excellent introduction. On new clause 15, why did he choose to limit his ambitions to three demonstrators rather than four? We received a clear commitment from the Government last week that they expected four demonstrators. If we row back from that as our minimum commitment, 25 per cent. of the ambition will have gone.

Charles Hendry (Conservative, Wealden)

I totally take the hon. Gentleman’s point. The purpose of choosing that number was to make it even easier for the Government to accept new clause 15. If we had said that there had to be four demonstrators, they might have said, “Well, that’s all rather complicated and difficult.” By setting it at an even less ambitious level than the Government have, we have made it easier for them to accept the new clause. If the Government wish to say, “Well, we’ll do it, but we’d rather it said ‘four’ than ‘at least three’”, we would have no problem with that. We are trying to give the Government greater resolve and drive the process forward with greater determination.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Even a future Government?

Charles Hendry (Conservative, Wealden)

Even a future Government, who would certainly be keen to see four demonstrators and would strengthen the measures even further.

I hope that what I have said has been constructive. We support the direction of the Bill. It is an important opportunity to make up for time lost, but we want to note at the outset that some ideas put forward in the Bill will not, on their own, be enough. There has to be a road map and we hope that the Government are prepared to support that.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Mr. Atkinson, may I first welcome you to the Chair for this part of our deliberations? We are very happy to serve under your chairmanship.

I am pleased to have my hon. Friend the Member for Harrogate and Knaresborough with me; he is a much respected Chairman of the Science and Technology Committee and will add to our ability to probe the Government effectively. May I say to the hon. Member for Wealden that we are supportive of the general approach that he identified in his introductory speech? We will be constructive. There is a lot of interest, knowledge and commitment on the Committee, and I hope that there will be a willingness to support good ideas, wherever they come from, so that we can get the appropriate changes. My hon. Friend the Member for Harrogate and Knaresborough and I support new clause 15.

As a more logical way of starting, will the Minister put her cards on the table in relation to the Government’s proposals if I sit down now? That would be a sensible way to proceed, so that we can know what we are dealing with. We can then comment on the issues, rather than have me set out my critique. The Government have been too slow and they need to catch up, but we now need to be supportive. If the Minister is willing to make her proposals and outline the Government’s plan, we will be able to quiz her more effectively. I would then like to come back and make my comments.

Peter Atkinson (Conservative, Hexham)

I call the Minister.

The Minister of State, Department of Energy and Climate Change (Joan Ruddock)rose—

Mr. Brian Binley (Northampton, South) (Con) rose—

Peter Atkinson (Conservative, Hexham)

Order.

Brian Binley (Conservative, Northampton South)

I am sorry, Mr. Atkinson, but I have my hand up.

Peter Atkinson (Conservative, Hexham)

If you stood I would be able to see you, because you are quite large.

Brian Binley (Conservative, Northampton South)

Thank you, Mr. Atkinson. I am less large than I used to be thanks to the onset of swine flu. May I say how much I and many other hon. Members welcome this Bill in general terms? It sets a platform for the development of clean coal in this country. We should never forget that we have an estimated 240 years of energy need in coal seams beneath our feet.

There is some disappointment with the Bill in relation to clause 1. I want to talk about those missed opportunities and see whether we can get further comment from the Minister before we make a possible amendment on Report. I am pleased that the Minister has confirmed that there are definitely going to be four demonstration projects. I am also pleased that she has said that two of them will be pre-combustion.

If we look at the cost estimates, we see that there is no doubt that pre-combustion could turn out to be sizeably less expensive than post-combustion, which involves the relatively expensive process of pulverised coal. I am concerned, however, about whether storage is involved in the provision of financial assistance. There is no sense in taking the carbon out of the coal if it is going to sit in lorries on motorways until we decide what to do about storage. I am therefore fearful that we have not said enough about where we are going to put the carbon—specifically, that from the demonstration projects—once it has been extracted.

Secondly, it is well known that I am concerned about the ability to enhance oil as part of the storage process. We only get about 35 per cent. of the oil from a given well out of the ground. It is said that we can get another 15 per cent. from the North sea, meaning a total of 50 per cent. from a given oil well. That will be a tremendous addition to Britain’s well-being.

Finally, we have not talked about how we are going to use British coal. We have talked about carbon capture and storage, but we have a great asset in Britain and I want to know how we are going to help the coal communities. What I am really arguing is that this whole Bill ought to have had a wider application. That is what disappoints me. I recognise that that is not in the Bill, but the Minister might touch on it, because we can enlarge the Bill on Report if it is felt that it is not large enough.

Anne Main (Conservative, St Albans)

On the road map in new clause 15, I would like a lot of reassurance from the Government, and any future Government, that, if we are to go down the route of encouraging a positive steer towards having at least three carbon capture and storage plants, they will not get tied up in the planning system. I want to be reassured that the Government will ensure that there will be plenty of co-operation between Departments.

I also seek reassurance that there will be a positive steer for planning departments to ensure delivery of at least three plants—a number slightly less ambitious than the Government intended, but with the words “at least” in front of it. It would be helpful for the Minister to reassure us on that, because it will be pointless to have the ambition if it is to get bogged down for years to come.

Tobias Ellwood (Conservative, Bournemouth East)

It is a pleasure to be part of the Committee and I am pleased that we are now moving to the more detailed proceedings. I am slightly concerned by the huge shout of silence from the Labour Benches; there have now been four speakers on this side and none on the other. I hope that that will not be how the Bill moves forward.

I look forward to what the Minister has to say. We arrived at the Committee with a sense of enthusiasm, armed with our amendments, for a Bill that could best be described as overdue, interesting and enthusiastic but perhaps mediocre in its ambitions. We come, as do others from all parts of the House, wishing to alter the Bill slightly. I hope that the Minister will give some clarity on the openness with which she will be able to greet some of the amendments, to try to improve the Bill.

My hon. Friend the Member for Wealden made clear in his opening statement that this is long overdue. It was clear from the evidence that we took last week that we could have been discussing this Bill five years ago. We did not, and that is a shame. We are doing so today, however, so it our ambition to beef up the Bill, to give it the necessary credence that will not just look after the needs involved with carbon capture and storage but expand to other areas such as gas; we have not had a proper explanation as to why that cannot be included in the Bill.

There are questions to do with pipe sizes and why we are not focusing on clusters; there are questions to do with pre-combustion and post-combustion and with the conduct and process of the competition, which we can now see was not conducted in the best way.

As my hon. Friend also said, we are looking to the Government for leadership. There are some ambitious plans to cut our CO2 emissions in this country. The whole of the nation would agree with that, but the method by which we are to get there is very hazy indeed. I invite the Minister to provide clarity, show leadership and agree to a timetable and a road map that will be able to stipulate the targets and how to achieve them. If we get to that point, we will have a very useful Bill that will be supported by my party.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

The issue of a road map is incredibly important and I hope that the Minister will lay out the response, as he was invited to by my hon. Friend the Member for North Southwark and Bermondsey. The road map is crucial in giving not only the Committee but the House the assurance that we are planning a proper route forward to bring CCS to fruition—whether it is with coal, gas or oxyfuels.

I wonder whether the hon. Member for Wealden, or the Minister, when summing up on the new clause, could respond to the issue about disused oil and gas fields. The point that the hon. Gentleman made about enhanced oil recovery is about an old technology. Americans have been using it for many years—pumping carbon dioxide into old fields to pull out the last 15 per cent. or so. We are entirely dependent on having those figures available to us.

As the Minister will be aware, the problem is that we cannot get any enhanced oil recovery if we cap and just fill the seams with sea water; it is finished from that point. Given that we are coming to the end of this parliamentary Session, does the Minister accept that we need to ensure that the interface with the oil companies, which we talked about last week, is given priority? That is important for the long-term use of CCS and a proper carbon sequestration. It is also crucial given the fact that we are going to be able to pull out of the North sea at some future date and enhance oil and gas fairly quickly.

Michael Weir (Scottish National Party, Angus)

I had not intended to speak on this clause, but the hon. Gentleman makes a very good point about interaction with the oil industry. There is a huge opportunity for the oil industry in the UK offshore area to become part of carbon capture and storage. It is, however, time-limited for the reason set out by the hon. Gentleman. It is also time-limited by the fact that much of the North sea infrastructure is ageing. If we are to have the infrastructure not only for oil recovery, but for the future of carbon, we have to set up a system that allows it to be retained until we are in a position to inject the stored carbon into the aquifers that form the oil fields of the North sea.

The oil companies will spend a considerable amount to retain the infrastructure, but we must be clear about when carbon capture and storage will be available to make sure that it is retained and that we have space ready for carbon once it is captured. That is missing from the Bill, although I appreciate that the Treasury has to have an input, because it will depend on the taxation regime in relation to the North sea. The issue should be looked at, however, in the round, and we also need to look at it as part of CCS.

Peter Atkinson (Conservative, Hexham)

Before I call the Minister to reply, I should say that we have had a wide-ranging debate on clause 1, as is perfectly appropriate at the beginning of a Committee sitting. I remind members of the Committee, however, that we are going to debate some of the details about oil and so on when we discuss the amendments to clause 6. The Minister will no doubt respond in her own way.

Joan Ruddock (Labour, Lewisham, Deptford)

Thank you, Mr. Atkinson. It is a pleasure to serve under your chairmanship. As you rightly say, we have started the morning with a wide-ranging debate. I am happy and willing to address the points that have been made, but I would also like to speak specifically to clause 1. We can then be clear about what the Bill sets out, which was not reflected by the opening contributions. Before I speak to clause 1 and to new clause 15, I will respond to some of the comments. That would make for a more coherent presentation.

I am grateful that the hon. Member for Wealden welcomes the Bill. However, as is so often the case with Conservative Front Benchers, he spoke in a way that was in danger of putting Britain down by suggesting that what is being done is in no way world-leading or groundbreaking. We are absolutely clear that it is both. Indeed, it is widely recognised in the world that the UK has been leading, and continues to lead, on the issue. He quoted various witnesses who gave evidence but he chose their comments selectively, to present a picture that I do not recognise. The comments made were perfectly reasonable responses to questions, and raised concerns, issues and analyses. They did not in any sense, however, suggest that this is not an incredibly important area of endeavour in which the Government are moving at a pace not matched anywhere else in the world. We have—it was said quite clearly—the best, most significant and comprehensive financing mechanism, and a framework that makes it clear that the projects will go ahead at a scale and in numbers that are not matched anywhere else in the world.

We have no evidence whatever that China is ahead on scale or complexity. Most of the projects that have been described—I have looked very carefully; I have asked for all the lists of all the projects around the world—are not nearly on such a scale, and it is scale that matters. It is no longer important to proliferate pilot projects of 1, 2, 3 or 5 MW. We need to talk about how to bring the technology to a commercial scale, and that is what the Government are doing.

Charles Hendry (Conservative, Wealden)

I am grateful to the Minister. I would seek not to be selective. I hope that I have tried to say that this is incredibly important technology and we want it to be world-leading, but also to highlight the fact that some people said in evidence that Britain had lost some of that leadership. Does she disagree with Dr. Chapman, who 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.]

Can she point to anybody in the evidence sessions who said that we are world-leading at the moment?

Joan Ruddock (Labour, Lewisham, Deptford)

As I have already said, I have asked for all the information that is publicly available. We have no evidence, from all the information that has been gathered, that it is more likely that China or Abu Dhabi will be the first to produce on a commercial scale. They are certainly doing a lot of work, and indeed we are collaborating with them on that work, but it is not at all clear, or obvious, to us that that is the case on scale. However, that is not to say, perhaps, that people are not going to do things that we are not fully aware of, as they are not in the public domain. Frankly, even it were the case, that is not a reason to put down Britain, because we are in this together.

One of the rationales for doing the work is not just to secure an energy mix in the UK, but to contribute on what is clearly an immense global issue. We do not need to make those comparisons in a way that is detrimental to our reputation, because we are working with other countries. We intend to do this; we have a carbon leadership sequestration project co-chaired with Norway, which brings together all the countries in the world that have an interest in CCS. In that sense, we continue to lead in the development and co-operation on CCS globally.

Tobias Ellwood (Conservative, Bournemouth East)

Mr. Atkinson, I seek your guidance. I hope that the Minister will not use the tactic of saying that Conservative Members are attempt to put down Britain. That is quite the wrong thing to deduce from what we have said. We are actually saying the opposite—that we are proud of where we are and proud of where we could go.

We want to raise the bar higher, because we believe that the Government are not ambitious enough. They have not shown the leadership that the country, great as it is, expects from its Government. That is why we are saying, “Set the bar higher, include gas, widen those pipes, introduce more pre-combustion and have something that we can be proud of that will take us well beyond what is being developed in China, or indeed Abu Dhabi or Dubai.” That is what we are saying: do not keep this down on a level that is out of date already, as was said in the evidence we heard last week.

Joan Ruddock (Labour, Lewisham, Deptford)

I have to say to the hon. Gentleman once more that his interpretation of the evidence and mine are obviously quite different. I repeat that we are the first country in the world to guarantee four projects at that scale—and with a financing mechanism, which is proposed in the Bill. No other country has done that. If that is not leadership, I do not know what is, and he should be proud of what we have done, rather than suggest that it is not adequate.

I was asked again about the sense of urgency that the Opposition seek to bring to the debate, the question of 2014 and the time this might take. There is of course a difference—people need to have it in their minds—between post-combustion on an existing plant, which can be retrofitted, and constructing a new plant. The time scale is clearly quite different. In the evidence sessions, we heard Scottish Power say that 2014 is doable and we accept that that is the case, and E.ON say that it was looking at, maybe, 2017. That is on a super-critical plant, which takes time to build. Perhaps the majority of the period would be spent building the new plant rather than the CCS element. We need to be clear that those are two different things. There is no question but that we have a great sense of urgency, and we see that reflected in the Bill.

Pre-combustion being ruled out is a matter for debate. The hon. Member for Wealden thinks it regrettable, we think it the right thing to do. Post-combustion is much more relevant to the world as a whole and is required as soon as possible. That is why the competition was limited to post-combustion, but the subsequent three projects, as we have clearly indicated, will provide for pre-combustion opportunities.

The hon. Gentleman asked about the development of cluster approaches. We agree that that could be the best way forward. It has been explored in our consultation and raised by the Secretary of State himself. We clearly want to do what is best, but we will make that judgment when we see what is on offer, which companies are prepared to come forward and what their proposals are. It may well be that companies themselves suggest that if there is a cluster they might achieve economies of scale in the pipes that will make sense for them. We are very much up for this. We are waiting to see what is on offer, but we have made it clear that we can understand that that would be important.

The hon. Gentleman then accused us of never being able to deliver on any of our targets. That is an extraordinary charge. First, we have put in place all the mechanisms, instruments and programmes that he is criticising. They were never there until this Government came to office. We have relentlessly pursued issues of, for example, fuel poverty, whereby 4 million people were taken out of fuel poverty.

Clearly we were on target, although we have been derailed on fuel poverty, as any Government would have been, for the obvious reason that we had global price rises. There was no way to protect people from those price rises; they were global in nature. Of course, our fuel poverty programmes have suffered, but not through want of effort on our part. On the 6 million homes, let me assure the hon. Gentleman that I am following that matter very carefully. It is one of my responsibilities and I can assure him that we are on target to secure the 6 million homes in the energy efficiency programme.

Anne Main (Conservative, St Albans)

I notice the Minister says that 4 million people have been taken out of fuel poverty, but in St. Albans 17 per cent. of people are now in fuel poverty and that figure has been going up. The fact that we have had such a large rise in the population of this country shows that quoting how many people have been taken out of fuel poverty is no good. One has to look at the relative increase. I would suggest to the Minister that this smacks of complacency. I know that people in St. Albans will be unhappy to hear that they have become a target to be met.

Peter Atkinson (Conservative, Hexham)

Order. I remind the Committee that we are not having a debate on fuel poverty. We are debating the clause and new clause 15.

Joan Ruddock (Labour, Lewisham, Deptford)

Dare I say that 4 million were taken out of fuel poverty and that there was a point at which we were on target? I accept totally what the hon. Member for St. Albans says about the current situation, which is very difficult.

The hon. Member for Northampton, South asked whether storage is part of the financing arrangement. Let us be clear: the project that we seek to support with our financing arrangements is to demonstrate the three stages, which are capture, transportation and storage. I think it was he who also asked about where we were going and how we would help coal communities. He raised again the point about enhanced oil recovery.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Before the Minister leaves that last point, as we heard last week, the two companies left that are applying for possible demonstration have no control over any oil and gas fields in the North sea. How does she propose to make the link between the pipes capturing carbon and where it will be deposited, unless she intervenes with the oil companies?

Joan Ruddock (Labour, Lewisham, Deptford)

I give the energy companies perhaps a little more credit than the hon. Gentleman does. I do not think that they need the Government to make the connections between their activities and those of the oil companies and storage facilities. They are constantly talking to each other, and often have overlapping commercial interests. When they come forward with their detailed projects, they are not going to present—either to the competition or in other ways—a scheme and say, “We can capture and transport it, but we haven’t a clue where we’re going to store it.” They will have conversations and make what they plan to do apparent to us.

What is the Government’s role? Our role is to facilitate and create the framework. Clearly, that is already being done as part of a European directive, which we are transposing. We create the framework and make it possible. It is not that we are not in dialogue with our stakeholders—we speak to them all the time—but I do not share the hon. Gentleman’s view that we have to make the link happen. It is obvious to everybody. Geological surveys indicate the potential for storage and where we can expect it to be in the UK, and we have created the framework within which that is possible.

Brian Binley (Conservative, Northampton South)

I am most grateful to the Minister, who is being generous in giving way. The Government have a leadership role to play in this area and have a responsibility not only on dialogue, but in ensuring that the pipelines remain viable. The Minister knows that many of the wells that we are talking about using for storage come to the end of their production life in 2015, so this is urgent. Will she tell us a little more about the dialogue that the Government are having with those companies and reassure us on that point? It is vital to the possibility of achieving enhanced oil and gas recovery from the North sea.

Joan Ruddock (Labour, Lewisham, Deptford)

I have been provided with some advice, but it does not go beyond what I have already said, which is that we are continuing to engage with industry to explore the extent to which any of those issues create barriers. Perhaps that is the hon. Gentleman’s point, whereas I am saying that the bodies must make their own connections and work out their own commercial arrangements—clearly, commercial arrangements will have to be facilitated.

Are there barriers? I say to both the hon. Gentlemen who raised those issues that they should, perhaps, talk to the oil companies. If they want to raise with me or my officials specific barriers that they believe are a problem, I shall happily answer those specific questions. At the moment, I am unable to go further than saying that we maintain the dialogue and are looking at whether there are barriers. As it is in everybody’s interest, the Government would not hesitate if barriers could be removed.

I would like to say more on enhanced oil recovery, because we have tried to find a way through, which is helpful, but first I need to say something about the references to the American experience. Following the evidence sessions, I looked at the issue, and the American experience is entirely on land. I asked whether we had any evidence from anywhere in the world of enhanced oil recovery using CO2 taking place offshore, and the answer was no. There is no evidence that that has been done anywhere. We will therefore be looking to an altogether new process of which we have no experience yet.

Tobias Ellwood (Conservative, Bournemouth East)

The Minister is being pressed on matters whose details we cannot specify at this stage; they will become relevant as the project proceeds. Does that not underline the point—this would satisfy the taxpayer, who has to foot a bill of around £9.5 billion—that, if we introduce a road map, we could ensure the leadership that the Government are expected to provide in order to link up the various organisations participating in this huge project, and to ensure that they can work together and that the money is well spent?

Joan Ruddock (Labour, Lewisham, Deptford)

I shall come to points relating to new clause 15 and the road map in a moment. Let me first finish addressing the issues on enhanced oil recovery. As I was saying, we do not have the experience, but, if it is to happen, it is very important to have a ready-made supply of CO2—as is the case in the American situation—and the carbon capture process could produce that. However, CO2 is not the only gas or material that can be used for enhanced oil recovery, and it may not be the cheapest. The energy companies need to ask themselves whether they think that enhanced oil recovery is financially viable. Although I agree totally that there is value in it, there are circumstances in which the cost of getting the oil will be more than the oil’s actual value in the current market. CO2 may not be the only answer to enhanced oil recovery; it could be an answer, but it would be new.

It is important to tell the Committee that we have ensured, through the Energy Act 2008, that CO2 that is permanently contained as a result of enhanced oil recovery is permitted and treated for the purpose of the emissions trading scheme in exactly the same way as CO2 that is stored directly. That is clearly a benefit.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That is a huge advantage.

Joan Ruddock (Labour, Lewisham, Deptford)

It is an advantage that CO2 would have over some other agent. We have made that possible. However, whether using CO2 for enhanced oil recovery is the best way forward remains an open question.

I now turn to what we are going to do to help coal communities. We have a nationalised coal industry—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Freudian slip.

Joan Ruddock (Labour, Lewisham, Deptford)

We have a private coal industry, for which the Conservative party is obviously responsible. We cannot direct a particular level of coal production. However, by providing CCS and a future for coal, we offer opportunities to private companies. As the hon. Member for Northampton, South knows, a company’s decision to invest more in the UK will be entirely dependent on the carbon price and the market. We will certainly provide the opportunity if the provision is accepted. If CCS works, coal will have a long-term future, which is undoubtedly what investment decisions will be based upon.

Brian Binley (Conservative, Northampton South)

Again, I am most grateful to the Minister. Will she at least assure us that discussions are taking place and that some thought is being given to the potential for using British coal and enhancing coal communities? I am sure that she is immensely interested in them.

Joan Ruddock (Labour, Lewisham, Deptford)

I can assure the hon. Gentleman that the Government constantly look at where our fuel supplies come from and what is in the best interests of the country from the point of view of coal security. That is obviously something of great interest to us and will always be so.

The hon. Member for St. Albans asked me to ensure that projects will not be held up by planning. She will know that we have—[Interruption.] The hon. Lady seeks to leave the room as I begin to address her point. She asked about planning and energy projects being held up. I have to remind her that it is Conservative local authorities that have held up so many energy projects. Perhaps she would like to try to address that in her own party. We certainly expect to try to facilitate, as best we can, greater ease in planning.

The hon. Member for Bournemouth, East raised the question of gas versus coal, and pre-combustion and post-combustion. We will have a long debate on those issues when we reach the relevant amendments, and I will deal with them at that point. He said that the Government have very ambitious emission reduction targets. He is absolutely right—some 34 per cent. reduction by 2020 on 1990, and at least 80 per cent. reduction by 2050 on 1990. Again, those are among the most ambitious targets in the world. I remind him of two things: one is the EU ETS, which is responsible for capping emissions from high-energy users. Also, we now have carbon budgets set in law, which bind us in three five-year cycles already going forward to 2022. As such, we are a carbon-constrained economy, and that is already in place, so anything we do is part of facilitating that, but it is not in itself the absolute determinant of what happens on overall emissions.

The hon. Member for Harrogate and Knaresborough spoke about the US and the technologies for enhanced oil recovery. I hope that I have given him some satisfaction already in my answers, but I am prepared, possibly outside the Committee, if there are real barriers that can be identified, for him to let us know about them.

The hon. Member for Angus referred to that fact that there is a time limit and we want the infrastructure to be retained. I think that that is very clear. The oil companies, which are very much our partners in this, are clearly aware, and are in dialogue with us, about that important aspect of the future of carbon storage.

Finally, before I turn to my presentation of what is in clause 1, I was asked about the office for carbon capture and storage. I just wanted to refer to that in the context of new clause 15, so let me first address new clause 15. The new clause, as it is written, would commit the Government to producing a timetable for delivery of three CCS demonstration projects within six months of Royal Assent. However, I have to say that we have already set out the timetable, as we see it, for the process of selecting the additional three projects for the CCS demonstration programme. That was done in our framework for the delivery of clean coal.

Let me reiterate that we plan to launch a competition for the selection of these projects towards the end of this year and to complete the process during next year. That is as quick a timetable as anyone could envisage. It is a challenging time scale, given the size and the complexity of the programme that we propose. Furthermore, the timetable is consistent with the recommendations that were put forward by the Committee on Climate Change in its first annual report, published last October. As we have already made these commitments to the delivery of the programme, we do not believe that it is necessary to include such a provision in the Bill.

Charles Hendry (Conservative, Wealden)

Can the Minister help us understand why she believes the road map is important for nuclear but not for carbon capture and storage? The road map is not just about the competition. It is about when the scoping work should be undertaken and completed and the reports made. It is about when the planning applications should start to be submitted. On nuclear, there is a completely comprehensive set of different elements, so that we can see at each stage what should be done at each point. People would have much more confidence in the ability to deliver on CCS if they could see the same commitment. I cannot understand why the Minister wants that commitment for nuclear but not for carbon capture.

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Gentleman will realise that I have not said that I do not want it. What I have said is that I do not think we need new clause 15, which is quite different. He drew the parallel with the Office for Nuclear Development and asked about the office for carbon capture and storage. That is the place for what he wants to be done in new clause 15. First, the new office for carbon capture and storage has not yet been established. We are in the process of developing the scope and the role of the OCCS. We had a meeting with stakeholders towards the end of last year to develop our ideas on that. That office, when set up, would be responsible and could consider whether—and we must assume it most likely—to produce a road map. That would be the appropriate place for discussions of the nature of the scope and so on and the details of a road map. That body would need to look at it. That would be something that would reasonably follow and, therefore, does not need to be in the Bill.

Charles Hendry (Conservative, Wealden)

I can almost hear the collective groan in industry when they read those words. It is six, seven, eight months since the Government announced that the office would be set up. It is frustrating beyond belief that it is not operational. Where is the Government drive in this? It is not enough simply to say there will be a new element within the civil service, accountable to Ministers who at some point in the future may get together and may set out a road map. Surely the Minister should be saying to industry, “To show you how determined we are to do this, to show you how committed we are to Britain’s being a world leader, we will put in place the road map. I, as the Minister, will be the one who puts my rubber stamp on it.” Then people would have real confidence that it is going to happen.

Joan Ruddock (Labour, Lewisham, Deptford)

I have real confidence that it is going to happen; the Bill makes all the provision for it to happen. I reiterate: we are looking to have the first call for the projects this year, to start the work next year. The financial mechanism comes in next year. We are doing as much as we can. This is a very complex, new and challenging area and I am confident that we will deliver.

Let me now, at this very late stage, turn to clause 1. The clause provides the framework for funding a programme of four commercial-scale CCS demonstration projects in the UK that will include demonstration of both pre and post-combustion technologies. Coal will continue to play a vital role in providing electricity supplies in the UK and globally, with its use globally set to grow dramatically.

The successful development and deployment of CCS will enable coal to play a future role as part of a diverse and secure low-carbon energy mix at home and abroad. That is why we are supporting the development of what will be critical technology in the fight against climate change. The significant investment required for the installation of the full chain of CCS means that it is not economically viable under current market conditions, and is unlikely to be so in the foreseeable future. The first projects will, therefore, require some form of financial assistance.

The clause gives the Secretary of State the power to provide the necessary financial assistance to CCS demonstration projects. It also enables the provision of financial assistance for additional CCS capacity at those power stations with demonstration projects, which would allow us to fund the retrofit of CCS technology to any unabated capacity at those new coal-fired power stations, should a decision to do so be taken in the future.

Financial assistance can be provided in two ways. First, the Secretary of State can provide it directly. That would be by way of a contractual arrangement between the Secretary of State and the CCS project; it is the arrangement envisaged for the successful project under the current CCS competition. Secondly, an administrator, initially Ofgem, can provide the financial assistance on behalf of the Government. Consequently, the clause gives the Secretary of State the power to make assistance schemes. Those assistance schemes, together with regulations made under clause 3, will create the vehicle for Ofgem to deliver funding to CCS projects.

Assistance schemes are akin to a contract and so, similar to the terms and conditions set out within a contract, they will set out the obligations, entitlements and incentives that will apply to the CCS project. Schemes can also confer functions on the administrator—for example, to monitor and to make payments to CCS projects. Ofgem is a creature of statute. Therefore, new duties and functions must be conferred on it by legislation. The clause will allow the Government to provide the funding required to deliver the UK’s world-leading CCS demonstration projects.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

It is helpful that the Minister has set out the general pattern, but I am still disappointed that the opportunities of CCS in the context of UK energy policy as a whole have not been set out more clearly. When I was first elected, coal was the major source of our energy supply, as you will remember, Mr. Atkinson. Things have substantially changed; according to the latest figures, about 16 per cent. comes from coal, about 33 per cent. from petrol, 41 per cent. from natural gas and about 2.5 per cent. from renewables—sadly, a very small figure. We, therefore, have a challenge as to what we do with the threat to our climate and environment if we continue to produce energy from coal in the same way, which is why CCS has been debated for a long time in this country and elsewhere.

My hon. Friend the Member for Harrogate and Knaresborough has passed to me—showing that he is wise before as well as at and after the event—his Committee’s report, entitled, “Meeting UK Energy and Climate Needs”, the first report of Session 2005—06, published on 9 February 2006. Page three of the report says:

“We find that the UK is well positioned to play a leading role in demonstrating CCS technology. The UK has rich expertise in geology and in oil and gas exploration and production. It is also fortunate in having an abundance of well characterised potential storage sites. UK industry has made it clear that it is poised to make substantial investments in CCS and full scale demonstration projects could be up and running by the end of the decade.”

Just so that we are clear, that is the decade that we have now left—the decade that ended at the end of last month. The report continues:

“However, the Government will need to display much greater ambition and commitment than it has done to date in order to take advantage of this opportunity.”

That was not a partisan Committee. It was a Select Committee with hon. Members from both sides of the House, including from the Labour party, who said, “Be ambitious, Government, and we could be up and running within a few years from 2006.” We are not, sadly, and we are coming to this much later than many of us would have wished. Indeed, my party has been clear for a long time—we reaffirmed this at our autumn conference—that we see carbon capture and storage as a pre-requisite for meeting our national, continental and global climate crisis obligations not just in the coal sector but, as we shall probe further, in the other sectors.

That is my second point. This is clearly a technology that should not just be pre and post-combustion. From what the Minister said, I deduce that she will accept on Report an amendment to put in clause 1 “pre and post-combustion”, just so that everybody is clear. I hope that that will not be controversial. She has indicated that that is what is intended. We all agree that it should be what is intended, so I assume that it can come back later without controversy.

This technology is also something that we should now move urgently to support. I will not repeat what has been said, but I endorse the arguments made by the hon. Member for Wealden and others that it does not appear that there is the necessary commitment up front in the Government, the Department and the bit of the organisation that is put in place to deliver it. I am sure that the industry would welcome the most energetic commitment possible. We have tonight in this building the offshore oil and gas industry new year reception. I am sure that it would give the Minister encouragement to broaden the technology and the application.

I want to make three points at this stage. First, when I was in Copenhagen in December—the Minister was also there, as were others—people were putting very strongly the argument that carbon capture and storage is a bad thing. There is an argument against it, but I am persuaded that, on balance, although there are risks, it is right for the UK to go down the technology exploration route. We heard evidence that, on balance, came out in favour of that. I say that particularly because of the location of our coal, the proximity to the sea and the fact that the logic is—I heard this last year when I was talking to experts from this country and the United States—that if we work on the basis that there can be co-operative clusters of activity between different companies in and around the Thames estuary, in and around the Humber, in and around the Tyne and the Tees, and probably and on and around the east coast of Scotland, we get the best of all possible worlds.

That is where much of the coal is. It is very near the places where storage is easiest. There are the disused oil and gas wells offshore. That means that we can minimise transmission, and therefore all the leakages and so on that happen inevitably with transmission, and we can minimise the infrastructure costs, which is obviously a key part of the proposal.

I say to the Minister that it would be really helpful to have not just the commitment to the funding of the three or four projects, but something in place that showed the infrastructure implications of all that, which we have not heard yet.

One of the great things that we lack in the UK—we shall return to this in other contexts of the Bill—is the infrastructure. It has been a problem generally in British public planning that we do not have the infrastructure to do the next phase of scientific and technological exploration. For my party, the vision is that all this is something that is not just part of a UK infrastructure or an infrastructure that ties in with our immediate neighbours, but that lies within the context of our continent—that has a European super-grid beyond and above it.

Secondly, I am disappointed that the Minister has not really addressed the concerns and urgency—this is why we support adding new clause 15 to the Bill—indicated by the Committee on Climate Change. I want to put to her those things in the report that it produced last year that she failed to allude to, which are about the roll-out of CCS technology. It has a very significant section in chapter four on delivering low-carbon power, and everybody respects the committee’s expertise and topicality. The report says:

“We argued that there is no role for conventional coal generation through the 2020s on the path to an 80% emissions reduction target in 2050, and argued that this should be signalled by the Government to investors... There is an issue over the appropriate role for CCS in gas generation... there is a longer term role for unabated gas generation reflecting lower emission intensity and a potential role as back-up generation... The Committee will... consider viability of gas CCS as part of its advice on the fourth budget, to be published in 2010.”

The report goes on to talk about specific questions on the design of the second competition. The Minister may well remember the following:

“How many projects should be included (one or more)? What technologies should this include (e.g. pre- and/or post combustion)?”

I think we have had those two questions answered. The report continues:

“What is the relative benefit of demonstrating CCS on existing versus new plant?”

It then goes on to say what it thinks should happen. I want to see whether the Minister ticks all those boxes and responds positively to what the report says. It bases that on

“the imperative to get a critical mass of CCS in operation at the earliest opportunity.

The second competition should follow as soon as possible after the first (e.g. in 2010), with the aim to reach operation soon after the plant financed under the first competition (e.g. in 2015 or 2016).

It should award support to more than one plant in order to maximise learning and the probability of success, provided that there is a sufficient number of competitive bids.

It should allow a range of technologies applied to both new and existing plant with a view to developing a portfolio of options for roll-out going forward.

It should allow proposals based on shared infrastructure and oversized pipes to highlight scope for cost savings due to economies of scale.

We will therefore use commencement in 2010 and conclusion in 2011 of a second competition... as a benchmark in our future progress reports.”

It goes on to comment on the signal that we are sending to the industry—the unacceptable idea that in the 2020s we will develop coal power stations without CCS. Those are its words, not mine. The committee commissioned PĂśyry Energy Consulting to do the work for it, as colleagues will remember.

“The top-down approach draws on modelling of power sector decarbonisation in the 2020s for our December report, which included up to 20 GW of CCS plant being added to the power system by 2030, depending on evolution of electricity demand and the levels of investment in nuclear and renewables. It assumes maximum feasible construction of 2.5 GW annually...It therefore requires roll out of CCS to start in the early 2020s in order to keep open the option of delivering the levels of CCS deployment indicated in this scenario.

The bottom-up approach recognises that the first demonstration project should be on the system in 2014 or 2015, with the second phase of demonstrations operational in 2015 and 2016. A decision on roll-out could then be taken as early as 2016, which with a period of five or six years for design, planning and construction would allow additional CCS to come on the system at significant scale from the early 2020s.”

Does the Minister accept all that as the timetable? Is that the Government’s view? On infrastructure, does she accept that

“a range of storage options would be required, with physical testing of saline aquifers,”

—alluded to by my hon. Friend the Member for Harrogate and Knaresborough and others—

“which are less well characterised than depleted oil and gas fields, an important near-term objective”?

The last two points are probably the most important.

“The issue...is whether energy companies could reasonably be expected to coordinate and exploit economies of scale, (e.g. by oversizing pipes and granting shared access).

It will be important that there will be a clear strategic plan and regulatory framework for infrastructure development in place no later—and ideally sooner—than any decision to roll out CCS.”

We have to see the whole thing as a timetable that starts now and goes right through to the implementation. The report goes on to say that

“the Committee will track progress in early development of a strategic plan for infrastructure development.”

It also states that

“there is no role for unabated coal-fired generation beyond the 2020s on the way to an 80% emissions reduction in 2050,”

and that

“any investment in conventional coal generation should only be allowed for an interim period and should be made on the full expectation that CCS would be retrofitted.”

The report’s final section is robust and poses questions to the Government. I would be grateful if the Minister answered them. The committee is concerned about

“whether the proposed framework would lead to appropriate application of CCS technology in a timely manner”.

In particular, it envisages

“a situation post-demonstration where the carbon price is insufficient to cover CCS costs, but where deployment is desirable given the strategic importance of decarbonising the power sector and the potential to further reduce CCS costs through learning. It is not clear that CCS would be regarded as proven in these circumstances under the Government’s proposals.”

The question is, do the Government accept that, to prove their case, they will not have to show that they can meet the cost without additional help—in other words, that the carbon price alone will be sufficient to meet the roll-out? Is that the Government’s position?

Secondly, the report notes:

“There is a long lag between when the first demonstration plant is scheduled to be up and running (2014) and the proposed timing for the review (2020), which is particularly problematic given the lead-times of five or six years for a CCS plant and the need to roll out CCS from the early 2020s.”

Do the Government accept that there might need to be a much speedier set of further decisions rather than a decision at the end of this new decade?

Thirdly, the committee states:

“We are also concerned as to whether the proposals give a strong enough signal that for any plant not fitted with CCS there will be little or no role further into the 2020s; the fact that there will be a review does not ensure an expectation that the generation would be severely limited.”

Do the Government buy the committee’s recommendations and say yes to them? It would be encouraging if they did. The committee makes a recommendation:

“Whether CCS is deemed proven should not be judged only on the basis of the carbon price.”

Do the Government agree? It also recommends:

“To the extent that retrofit might be considered desirable in this context but would require additional support over and above what is likely to be provided by the carbon price, investors should be given comfort now that a mechanism would be introduced to provide this support.”

Is that agreed? The next recommendation is:

“Such a mechanism should be introduced no later than 2016 to support roll-out once the first demonstration plants become operational.”

Is that agreed? Finally, the committee recommends:

“The Government should make it absolutely clear now that whether or not CCS can be deemed economically viable any conventional coal plant still operating unabated beyond the early 2020s would only generate for a very limited number of hours.”

Is that agreed?

My last question is not related to the CCC report. Does clause 1 mean that the Government believe that assistance should not be used to provide wider support for CCS technology once it becomes commercially available, or to develop infrastructure beyond that which is necessary for demonstration? We need to be clear that it is limited to those two things.

Others are developing CCS technology in parallel with us. We know where they are and assume that those who are developing it here will learn from global initiatives elsewhere. As the Committee chaired by my hon. Friend the Member for Harrogate and Knaresborough has made clear, we are terribly behind. We can catch up—there is the will to do it—and we are all supportive of the progress. It would be helpful, however, if the Government put all their cards on the table so that the industry can respond, and see that there is a commitment to the first competition and how the whole programme over the next five years will work. If that happens, we believe that we can have a new generation of coal-fired power stations that are likely to be CCS fitted with no unabated coal, from the beginning of that generation in 2020. That will be necessary to curb the coal industry’s emissions, and it will also be necessary to do it across other sectors to curb emissions as a whole. We could probably curb 90 per cent. of emissions in the power sector if we did that across all the component elements.

That is a good way to proceed if we are to meet the climate crisis challenge, but the issue needs more robust legislation. Indeed, I think that the theme of this Committee will be to try to make the Bill more robust—through our party’s amendments as well as through those, such as new clause 15, tabled by colleagues.

Charles Hendry (Conservative, Wealden)

We have had a useful and helpful debate on the opening clause; I hope that as the debate goes on we will start to see some interventions from Labour Committee members as well. I have been struck by how many people who really know about energy have been put on the Committee, including four members of the Select Committee. It is very positive of the Government to put a significant number of energy experts on the Committee, and I hope that they will find their voices as we move forward in our considerations.

I hope we can agree on one thing—that no one here is interested in talking down Britain. If anything, we have sought to highlight the frustrations of business and those in academia and elsewhere about the pace of progress on carbon capture and storage. We want Britain to lead the world. We have a high ambition, as do the Liberal Democrats, the Scottish nationalists and, I have no doubt, the Government. We all want Britain to be a world leader. Our goal is 5 GW of new coal, equipped with carbon capture and storage, in place by 2020. That could be three plants, four plants or more. It is that magnitude of change that we are looking to achieve.

The hon. Member for North Southwark and Bermondsey talked about the declining role for coal. Yesterday, coal was responsible for 43.5 per cent. of the electricity generation in the country. This could not be a more timely debate. In times of duress, particularly in severe cold weather, the coal plant is pumping out at maximum capacity. How we continue to keep coal as part of that energy mix is very important but we need to move faster. While the measures in the Bill are welcome and clearly crucial and important in taking this forward, what business is looking for is greater certainty than currently exists.

That point is important for the road map proposal in new clause 15; I ask the Minister to give further consideration to it as we go through. Even if she does not want to accept the new clause, if she were to say to us, “We will publish that road map within six months”, that would be enough; it would give us the certainty to go to investors and say, “You will in the course of the next few months have the detail you need.” The issue is not just about the competition. It is also about the scoping work, as I have said, and who is to carry it out on the potential fields for sequestration. It is about when things come into planning and a whole range of other things, as we have seen with the nuclear road map. Giving industry that certainty would be very powerful.

I am sure that work is being done in the Department. If there were to be a change of Government in a few months’ time, one of the first things a new Minister would wish to see is that draft road map. There is no doubt that this Minister’s officials are beginning to think about what would go in that road map. Why does she not just take the credit and say, “I will make a pledge today that within six months there will be a road map”? If she did that, I think we would agree that our new clause would be unnecessary and superfluous. Without that, we are going to continue to press her, saying that in these areas we need greater clarity about who should be doing what by when.

The issue of enhanced oil recovery could not be more crucial to the debate. Important work has already been done on the scoping of some of the potential sequestration sites. Particular credit should go to Professor Stuart Haszeldine of Edinburgh university for the work that has happened there. The scoping work in Scotland has been carried out in greater detail than that in England, with credit due to the Scottish Government. That is not to denigrate the work undertaken by the Royal Geographical Society.

If we do not know the detail—when we will know which sequestration sites will be possible and where enhanced oil recovery may be relevant—that will stifle the speed at which we can move forward in developing some of these projects and the very important work. A road map does not have to be definitive at this stage. Inevitably, this is work in progress; inevitably, it gives industry the chance to say, “We want greater clarity on this. We think these areas have not been included and should be.”

The nature of a road map evolves over time. It gives everybody a sense of what they are working to. The point I made earlier about targets was not to criticise the Government for failing on them—although it has failed on many—but to say that a target without a road map means that nobody really knows whose job it is to do what to make that target happen. If we have very ambitious targets for CCS, having a road map in place will be of benefit to everybody; the Government, the office of carbon capture and storage and the industry will know what they need to do. Everybody will understand what has to happen and slot into place each month to keep us on track and on target.

If the Minister will give a greater commitment on that today, the industry out there will move from groaning in frustration and saying that we are not showing the determination that it wants, to giving a big cheer. The greater commitment could be announced tonight at the annual oil and gas annual event in the House. It would be met with great enthusiasm and delight and would indicate that the Government are determined to deliver on the time scales.

Finally, we are looking at how the whole process can be speeded up. The evidence session last week clearly showed the frustration at the pace at which the competition has moved. Is there scope within the competition to say, “Look, here are two proposals. Kingsnorth will have a new build and Longannet will be retrofitted”? We can save ourselves a year by finishing the competition now and awarding both of them a contract and taking them forward. The remaining competition will look for two pre-combustion approaches. That would save us a year and industry would be delighted. Is the Minister considering that? It would move the debate up a gear and show that the determination that she has shown in her words will be matched by action.

Joan Ruddock (Labour, Lewisham, Deptford)

May I refer to a point made by the hon. Member for North Southwark and Bermondsey? Almost as a throwaway, there was an assumption that we could agree a new amendment to include pre and post-combustion in the Bill. It is only reasonable for me to say that I would resist such an amendment. We do not want to specify specific technologies in that way, and, as he knows, it is not normal practice. The record stands; we have made a policy decision and I have repeated on a number of occasions that both pre and post-combustion will be supported. That should be sufficient, so we do not want to put it in the Bill.

The hon. Gentleman posed a long series of questions—well, not questions so much as repetition of the points raised by the Committee on Climate Change. We have considered its report carefully and will publish a full response shortly. He will have greater detail then than I can give him today, but I shall try to cover the points that he made. I have made it clear that there will be four projects and that there will be pre and post-combustion technologies. On the question of whether we should use existing or new power stations, we are clear that we want the greatest learning benefit from the projects so, in principle, it is desirable that there will be a mix of existing and new projects. However, we will have to judge when we see the quality of the proposals.

As the hon. Gentleman said, the Committee on Climate Change suggested that the second competition should follow as soon as possible. I have indicated clearly to the Committee this morning that it will follow as soon as possible and that the first call will come this year. I have dealt with the fact that there should be a range of technologies. Proposals on shared projects, infrastructure and pipelines should be allowed; clearly, there is no question that they would be disallowed.

On the suggestion that there should be a roll-out of CCS, starting in the 2020s, I should say that that has always been the stated aim of the Government. It still seems entirely feasible that second stage projects would come on stream in 2015-16.

The hon. Gentleman raised the comments of the Committee on Climate Change about the review in 2020 being too far ahead. I think that in my evidence I indicated that we now plan a rolling review, to conclude in 2018. We have heeded the concerns of the committee.

On retrofitting, it is clear from the Bill that we are providing a funding mechanism that can be used to retrofit beyond the carbon capture and storage demonstration at a particular plant. The same financing mechanism could be used to continue financing to move from what is approximately 25 per cent. coverage for CCS to 100 per cent. We have made it clear that that could happen where new power stations have had that treatment.

What we cannot say at this stage—and this applies to all the questions put by the hon. Gentleman and the Committee on Climate Change—is where we might be in economic and commercial terms by 2020. I cannot predict that, and neither can the hon. Gentleman or the committee, so I cannot tell him today what will condition our thinking. I can tell him that that is, of course, the whole point of a rolling review. That review will deal with several things, including the other projects, and particularly the EU projects, because we anticipate 12 CCS projects being funded by the EU in the same time frame and we will learn from them. We will be able to see the carbon price, and how it is moving, and of course that depends on making more progress on the Copenhagen accord.

There are so many unpredictable elements that at this stage we cannot say we will make a judgment about commerce and the economic situation in the 2020s, and predetermine that. We must provide a mechanism that leads us to make the right decisions, and that is the rolling review that is to be concluded in 2018. The way in which we come to a judgment about what constitutes commercial viability is part of that process, but one thing that we did in addition to what the Committee on Climate Change asked of us was to say that all new coal-fired stations must demonstrate CCS on a proportion of their plant.

In addition, as the hon. Gentleman will already know, a significant number of coal-fired stations—I think it is five, although I cannot remember; perhaps someone will want to correct me on that—will come to the end of their life by 2015, with the vast majority continuing into the 2020s. Therefore, as to the question of what unabated coal remains, the very limited lifetime referred to by the Committee on Climate Change is likely to be the reality, no matter what the Government do. We are bound by a lot of other legislation that is bringing our ageing plants to the end of their lives.

The hon. Member for Wealden invited me to say that we would publish a road map and give industry certainty. I think that I have already suggested that we consider it to be premature to make a statement that we will publish a road map in that time scale. If we were prepared to give a commitment to that this morning, clearly we could accept the new clause, which we are not prepared to do. However, I have tried to assure the hon. Gentleman that through the new office for carbon capture and storage there will be a process to cover that ground entirely. I have tried to indicate the extent to which we constantly engage with our stakeholders. I do not share his view that industry is so critical of us. A lot of the response we get from industry on the question of CCS is very positive. We are content that we are working effectively with the industry. We are content that, within clause 1, we are providing a framework setting out what we plan to do.

I have endeavoured to give as many assurances as I reasonably can to the Committee. We have the ambition and the determination, and we will see this through. As I have indicated, we will have gone further than most countries in the world in trying to make CCS commercially viable.

Clause 2

Charles Hendry (Conservative, Wealden)

I hope that we can now make more rapid progress as we go through some of the next clauses. The elements included in clause 2 are generally sensible, but there are a few aspects of internal clarification for which I would be grateful.

Some concern has been expressed to us about the powers for revocation of a licence and support. It is not clear from the Bill or the explanatory notes whether the operators of a CCS project would be required to be consulted in the process. Clause 2(7) suggests that they would, although paragraph 20 of the explanatory notes suggests that there are circumstances in which that would not be necessary. It would be helpful if the Minister could give greater clarification on that and show us how those issues will be addressed.

I would also be grateful if the Minister would tell us something about the support for transportation of CO2, as that does not appear to be covered here. It is clear that the generation side, the separation side and the sequestration side will be covered. The Minister indicated earlier that transportation would be included. That is clearly one of the most complicated and technologically difficult parts of the CO2 management process, so I would be grateful for specific confirmation that transportation will be included. I would also be grateful if she would comment on the issue of support for the extra operating costs of a plant. My understanding is that if a CCS facility is attached to a coal-fired plant, it will increase the operating costs by about a third or a quarter, because an enormous amount of the electricity produced will itself be required to run the CCS facility. That is a rough ball-park figure; there might be some discussion around it. A very significant proportion of the output is used for that. Do the Government intend this support to help cover those extra running costs, in addition to the capital and the costs involved in setting up the plant in the first place?

Joan Ruddock (Labour, Lewisham, Deptford)

First, the clause clearly makes further provision about assistance schemes that can be made by the Secretary of State under the power contained in clause 1. Assistance schemes provide a framework within which Ofgem can carry out the role of administering the financial incentives for CCS projects. Ofgem is a statutory body and, as I said earlier, legislation is therefore necessary to confer new duties and functions on it, in this case for the purposes of providing financial assistance to CCS projects. The clause sets out a detailed but non-exhaustive list of the matters that we expect will typically need to be covered in any arrangement under which financial support is provided to CCS demonstration projects. For example, under subsection (2)(a), schemes can specify the type of CCS activities that must be carried out and, under subsection (2)(b), provision can be made about the level of financial support provided.

Where particular arrangements are of a detailed nature and can be considered special to an individual project, they will be set out in the scheme. Much of the detail contained in a scheme will be able to be finalised only once a project has been selected to receive support. We expect that the regulations for schemes will contain those provisions that might be considered generic to all projects, such as any process for reviews and appeals. Similarly to a typical contractual arrangement, subsection (7) provides that schemes can be made only with the consent of the participants, who will be the developers of the CCS project.

As with any arrangement of this type, the provisions provide the flexibility for a scheme to be amended or revoked, which brings me to the point that the hon. Gentleman raised. The participant will have been aware of the provision that could revoke a scheme without their consent when they agreed to be a party to that scheme. We envisage—this relates to what the hon. Gentleman saw in the explanatory notes—that there could be circumstances in which there was a dispute when the company was not carrying out what had been agreed under the scheme and did not agree with the Secretary of State that the scheme should be revoked accordingly. In other words, there could be circumstances in which it could not be agreed that the scheme, for whatever reason, should come to an end, and in which it would be deemed by the Secretary of State that the company had not carried out its agreements with Ofgem or, if it was in a contractual position, with the Government.

The regulations will make clear that that could happen, and will outline the relevant circumstances and how any appeal could be undertaken. Nothing could be sprung upon a company without it having known from the outset that that was a possibility. Such circumstances might include when a project has failed or could not continue to meet its obligations under a scheme to the extent that there was no reasonable alternative but to revoke the scheme. I think that “reasonable alternative” is the appropriate wording there.

It is important to say that I will not be able to go into great detail on this aspect of the Bill. We will develop the detailed provisions over the coming months, and I stress that we will be working closely with stakeholders and that we will formally consult on the provisions in the summer. It would not be reasonable at this stage for me to set out more detail. I simply give the assurances that we will be working properly with stakeholders and we will be consulting. I was also asked about transportation, and I can confirm that transport of CO2 will be covered by the schemes and that running costs are covered where they relate to a CCS project.

As I was saying, as with any arrangement of this type, the provisions provide the flexibility for a scheme to be amended or revoked. That can be with the consent of the participant in a scheme or, where provided for in the regulations or scheme itself, the amendment or revocation can be carried out unilaterally by the Secretary of State, as I said. That flexibility is particularly important given that demonstration projects may be supported for up to 15 years.

Where a scheme is made, amended or revoked, the Secretary of State must consult the administrator, Scottish Ministers, when assisted activities are in Scotland, and any other person whom he thinks it appropriate to consult. Any new or amended scheme, or a memorandum of the revocation of a scheme, will be laid before Parliament so that it is kept informed of the use of these powers.

The provisions in the clause are required to enable the detailed arrangements to be put in place for administering the CCS incentive, and are therefore critical to delivery of the demonstration programme.

Clause 4

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment 3, in clause 4, page 4, line 18, leave out subsections (3) and (4).

This amendment is a probing one, as is the next one. It relates to the electricity supply levy, which is the subject of clause 4. It is designed to explore whether it is appropriate for the levy to be on all suppliers and sources, given that obviously it will have specific benefits in a certain part of the industry.

At the moment, there is the ability to have a levy on different sources differentially. The amendment would strike out that provision and allow the Minister and the Government to act differently. I wonder whether the Government would like to comment on what the logic of their argument is on whether it is appropriate for the renewables sector to contribute to the levy. When we probed that issue earlier, the Minister responded that at the moment all sectors contribute to the levy on renewables—the renewables obligation. It does not seem to me that it necessarily follows logically that if we are doing something that is raising money to develop carbon capture and storage from the processes that produce the carbon, we should also be putting a levy on the processes that do not produce carbon. I ask the Minister to think again about that.

My understanding is, however, that that may not be the specific purpose of the clause. The thinking behind the Government’s proposal may be different. The proposal may be that coal suppliers should not be contributing to a fund that will go back to them. Will the Government share with us what the explanation is?

I want to make one important point that comes from other people’s research. Obviously, if this works, there is a huge potential earner for the UK in carbon capture and storage. We are not the experts, but we have had experts give evidence to us. In an article in this month’s Parliamentary Brief, Jon Gibbins, a co-author of one of the papers submitted to us, says:

“Several studies have shown that the UK deep offshore holds a vast storage potential, perhaps enough to store 100 years of emissions from all power plants in NW Europe...Selling UK storage capacity which is proven and licensed as an EU asset may be worth â‚Ź5bn a year for 50 years if developed efficiently. An essential first step is to evaluate UK storage in more detail using actual CO2 injections at a number of different sites, but this cannot be done without a demonstration programme to supply the CO2.”

An impressive table shows that in what are described as the top 13 states in and around the EU, Norway has the largest capacity, which is principally in aquifers; there is a little in gas. We are second. Norway and the UK are first and second by a mile, ahead of anybody else in the league. We have the south North sea gas capacity, referred to earlier by my hon. Friend the Member for Harrogate and Knaresborough, the north North sea’s potentially very large aquifer capacity and the potentially even larger unproven aquifer capacity. Way down the league table are Germany, Spain, France, Denmark, Slovakia, Italy, Bulgaria, Poland, Croatia, the Netherlands and the former Yugoslav Republic of Macedonia. All those put together would not have the same capacity as the UK.

If this is such a potentially rich source of finance for us—with fantastic export potential; we could not just store our own CCS, but take in pretty much the rest of our continent’s—how are the levy and the costing thought through against the backdrop of what the earning might be? Is there any consideration of what the charges might be and where the payback might be? Obviously, if we are trying to save UK plc budget money there could be a levy that is charged now and is paid back, or reimbursed. That might be an incentive to certain parts of the industry. I would like to know how the Government see the issue in the context of not just a one-year piece of legislation, but the incentivisation of the industry and the development of CCS—in the end, seeking to ensure that those who benefit have not had a subsidy that cannot be paid back at the end of the day, out of what may be very large profits indeed. I hope that that is clear and would appreciate the maximum indication that the Minister can give us.

Alan Whitehead (Labour, Southampton, Test)

Following on from the hon. Gentleman’s questions about the nature of the levy, will my hon. Friend the Minister provide a little clarity on some of the structure of the levy? I appreciate that that is a matter for further regulation. However, I remain unclear about how the levy will be charged over a period of time and therefore accumulated into what might be regarded as a fund that will then be disbursed in the assistance scheme, either during the collection levy or at a future date subsequent to that levy being collected.

Presumably, that levy will continue to prop up that fund as those disbursements take place. Therefore, is it the Minister’s understanding that such a levy is effectively a ring-fenced fund set up separately from other purposes that the Treasury, shall we say, might have for such a general fund? Is it her understanding that, should such a fund be set up, the interest that might accrue would also go towards CCS projects, rather than for other general purposes? If that is not her understanding, does she intend to regulate to ensure that such a fund—in its entirety, one way or another—is applied to CCS projects? If not, might there be other specific uses for the interest gathered on the fund, prior to its being disbursed for CCS projects, for example? I am thinking of other renewable new technology that might require development and assistance in the meantime.

Joan Ruddock (Labour, Lewisham, Deptford)

The clause gives the Secretary of State the power to make regulations that place a levy on electricity supplies, with the levy paid by electricity suppliers. The levy will be used to fund a financial incentive that will support industry in bringing forward a programme of four commercial-scale CCS demonstration projects and, should it prove necessary, the retrofit of any unabated coal capacity at those stations.

Amendment 3 is, as the hon. Member for North Southwark and Bermondsey said, a probing amendment that would remove the flexibility that subsections (3) and (4) provide for giving exemptions or relief to certain types of supply. Subsections (3) and (4) will allow us, through regulations, to set the levy at different rates in different cases or to exempt certain supplies from the levy altogether.

I have made it clear previously—I will return to the matter in a moment—that we see that as very limited at present. For example, we think that the provisions could be applied to types of supply categorised by generation source or by end user. At the moment, the only example that I would give that is concretely under examination concerns whether subsection (4) might be used to exempt exported electricity from the levy. That is the area that is currently under consideration.

Subsections (3) and (4) also allow us, for example, to adjust the levy for certain business sectors such as energy-intensive users. Obviously, those users have made recommendations to us about how they should be considered. They make special cases and we shall consider the issue. At the moment, however, we have made no decisions about it.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I should be grateful if the Minister amplified the argument about why there would be logic or fairness in exempting energy-intensive users. Obviously their bills are bigger, and therefore their levy would be a top-up on a big bill, but there is no logic to their not paying their fair share into the kitty, as it were, for the development of the new technology.

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Gentleman makes a reasonable argument. The energy-intensive users’ argument, of course, is that there is a prospect that the levy will have an unacceptable impact on their industries, and that that should be avoided. All I am saying is that that is the representation that we have received and will consider, but I have made it clear that at the moment we have made no decisions to exclude anyone from the process.

I was asked specifically about renewables.

Brian Binley (Conservative, Northampton South)

I am concerned about the potential thinking of the Government on this matter. Does it mean that, proportionally, small and medium-sized businesses will have a heavier load than the businesses that the Minister has described?

Joan Ruddock (Labour, Lewisham, Deptford)

No. I have said nothing to that effect. I have said simply that representations have been made and must be considered. If the witness had been able to attend, the Committee could have heard the case for that approach directly. That did not happen, but I must inform the Committee that a case was made to us. As I have said, we must give consideration to the specific issue relating to the export of energy; there is European law that we must consider alongside it. We need to consider that one issue, but no other decisions have been taken.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

An interesting point has been raised. The Minister has referred to the issue of exports. We also import a significant amount of energy. Does that mean that we will be able to charge the levy on imported electricity?

Joan Ruddock (Labour, Lewisham, Deptford)

I am sure that the answer must be no. It is a question that I have not had asked, but I think that the answer must be no because there is no such provision in the Bill. Lawyers will need to look at it. [Interruption.] Oh no! I am exactly wrong.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Shall I ask the question again?

Joan Ruddock (Labour, Lewisham, Deptford)

No, please do not ask the question again.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Will the Minister give way?

Joan Ruddock (Labour, Lewisham, Deptford)

No, the Minister will not give way at this point. I am being told that we can tax imports, but whether that is our intention or whether the Bill provides for it is another matter. I am being rescued, but without sufficient information to enlighten the Committee. We will see.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Can I help the Minister?

Joan Ruddock (Labour, Lewisham, Deptford)

No.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am happy to help.

Joan Ruddock (Labour, Lewisham, Deptford)

I am delighted to have the help of the hon. Gentleman.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister has been caught by my hon. Friend the Member for Harrogate and Knaresborough. I was simply going to say that we would be happy if she gave us the amplified explanation of the policy in the clause stand part debate in a minute; we do not want to force her to do so at this stage.

Joan Ruddock (Labour, Lewisham, Deptford)

Right, let me try to continue. I was trying to answer the question about renewables and whether we should exempt them. The answer is that we are dealing with supplies overall and have issues of energy security, so we have to bear in mind that we all—including the companies themselves—benefit from having an energy mix. Furthermore, it is to the benefit of those who produce renewables, and certainly to the customers, that coal is part of the energy mix and gives stability to the security of supply. We see CCS as being to the benefit of all because without it we can not envisage having coal in the mix—and if coal was not there, it would be a disbenefit to all. Therefore, it is not unreasonable to put the levy on renewables and other kinds of supply.

Anne Main (Conservative, St Albans)

We have talked about large energy suppliers, but how small would the Minister consider going? What about microgeneration and people who put back into the grid, as a church in St. Albans does from solar generation? How small would the supplier have to be to escape the levy, if escape is at all possible?

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Lady is talking about something completely different. We are talking about supply companies and she is talking about local generation, which is of a completely different nature and is about to be incentivised by the Government. It is not covered by the provision.

If I may, Mr. Atkinson, I will try to make a little progress, otherwise I will completely lose track of what I am trying to say. As I have indicated, at the moment we do not intend to apply any exemptions or reduced rates when we first introduce the regulations for the levy, but, given that the levy is likely to be in operation for 15 years or longer, it is important that we have the flexibility to adjust it in response to changing circumstances.

Tobias Ellwood (Conservative, Bournemouth East)

I am sorry to pursue my hon. Friend’s question, but it is important. I shall give the Minister an example: if a farmer is able to generate all his electricity through wind farms, or whatever system he has, will he be exempt from the levy? Do the Government see that as a situation in which he would not be paying the levy? Is the Government’s intention that everyone, regardless of the source of their electricity supply, will contribute?

Joan Ruddock (Labour, Lewisham, Deptford)

I am being provided with information that I cannot read, unfortunately.

Tobias Ellwood (Conservative, Bournemouth East)

Shall we have a break?

Joan Ruddock (Labour, Lewisham, Deptford)

No, no. This is the answer: it is what I have been trying to indicate. The issue is just not relevant. The levy applies to licensed suppliers; small microgeneration schemes are not licensed suppliers and will not be caught. That is, definitively, the case.

Our intention is that the detailed policy for the levy, together with the draft regulations, will be subject to a formal public consultation this summer. Clause 4 also requires that regulations be laid in draft and approved by both Houses of Parliament before they can be made. That will ensure that the hon. Member for North Southwark and Bermondsey will have more than one opportunity to scrutinise and comment on the detailed provisions of the levy before they are finalised. I hope, therefore, that he will not pursue the amendment; it would not be helpful to the Bill.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am grateful to the Minister for her response, which opens the subject. As she indicated, the regulations must be considered under the affirmative procedure and will need to come before the House, where we will have the chance to debate them. She indicated—as does the Bill—that there will be a consultation.

As I said, this is a probing amendment and I will shortly seek leave to withdraw it. However, when we come to the clause stand part debate, it would be helpful—and of interest both to the Committee and outside—if the Minister stated current Government thinking about the amount of the levy. One of the factors— [Interruption.] Well, if there is a plan for a levy, the Minister must have an idea of how much it will cost in general terms. Plenty of thinking on that has gone on outside the Government, so I am sure that it has gone on inside the Government.

As my hon. Friend the Member for Harrogate and Knaresborough noted, one of the factors is that the bigger the levy is likely to be, the stronger the argument for sharing it across a larger number of payers, as that would obviously make for a smaller burden per contributor. Therefore, the argument for keeping everybody in the system and paying becomes stronger the more it costs. I hope that the Minister will return to that matter. I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment 4, in clause 4, page 4, line 34, leave out paragraph (g).

Under subsection (5) there is a list of things that the regulations may make provision about. Paragraph (g) is the

“provision of information, including its provision to third parties”.

This is a probing amendment that would strike out that provision. It would not allow the regulations to deal with the issue of what happens to the knowledge that is gleaned from the carbon capture and storage development process. My question, which I and others have raised elsewhere with Ministers, is, what happens to the intellectual property arising from that process?

Two questions seem to be involved. First, are we clear that the information can be shared not only within any consortium that wins the competition for the project, but more generally? Everybody is investing in this science, which is the purpose behind the debate, the Bill and the levy. Therefore, we all ought to benefit; it should not be kept for private commercial advantage.

Secondly, following the themes of the Copenhagen conference and the international climate change discussions, there is a need for the richer, more developed countries to share the benefits of our technological advances with developing countries. I want to ensure that any intellectual property can be shared with other countries that might not have done the work or had the development and which may be further behind, even though their need might be greater than ours. There are countries in Europe that have a huge amount of coal, and large countries such as China have massive coal industries that pump out emissions all the time. There are also smaller and poorer countries—some in Latin America—that would benefit from such information. I would like some reassurance that the intellectual property will be shared.

Joan Ruddock (Labour, Lewisham, Deptford)

The clause gives the Secretary of State the power to make regulations that place a levy on electricity supplies, to be paid by electricity suppliers. Subsection (5) sets out a non-exhaustive list of matters on which the Secretary of State can make provision through regulations. Paragraph (g) expressly provides for regulations to require the provision of information, including its provision to a third party.

The main information requirements that are likely to be imposed under levy regulations will be for the supplier to provide information to Ofgem to enable it to carry out its administrative functions. The type of provision that might be made in regulations requiring information to be given to a third party would be requirements for the supplier to provide information directly to a third party, or for Ofgem to provide to a third party information that it had received from the supplier.

Amendment 4 would remove the express provision to make any such requirement. Requiring the provision of information will be an important part of the levy arrangements. As with other forms of taxation, those paying the levy will be expected to provide information to the administrator of the levy.

In the case of the levy, we would expect suppliers to provide information in respect of the amount of levy due in a particular period and the basis of the calculation of the amount due. That is likely to include information on the amount of electricity supplied by the supplier in an accounting period and possibly the amount of that electricity that qualifies for the levy. That will form part of the declaration that is made by a supplier to Ofgem. Suppliers may also be required to notify the administrator of such things as changes in ownership.

As the administrator, Ofgem will be expected to prepare and publish a report each year on the operation of the levy, as it does for the renewables obligation. We expect that at least some of the information provided by suppliers would be used in the preparation of any report. Information provided by suppliers might also be used to assist the Secretary of State with budgeting and financial management of the CCS programme.

The wording of clause 4(5)(g) could also be used to require suppliers to provide information directly to a third party. At present, we do not anticipate any circumstances where we would include that in regulations, but one example of where the use of a power might be appropriate would be to require the provision of information for the supplier to an auditor appointed by Ofgem.

We believe that the provision of information is an important part of ensuring that the levy can be operated effectively and is open and transparent. I can assure hon. Members that any information or data considered commercially sensitive will, of course, be subject to a high level of safeguards. As the provision of information is a requirement that we can be certain will be part of the final regulations, I believe it is appropriate to refer to it in the clause so that our intentions are clear.

We intend to set out the details of any information requirements and the use of information received in the reporting process as part of the consultation on the regulations planned for the summer. That, together with the requirement that those regulations are subject to affirmative resolution, will ensure that hon. Members have ample opportunity to look closely at the detail before it is finalised.

From what I have just said, the hon. Member for North Southwark and Bermondsey will see that this provision relates to the levy—to the schemes specifically—to ensure that it is properly regulated and that Ofgem has the information it needs to ensure that the schemes are being properly carried through by the companies. That is a rather different information provision from the one he raises in respect of intellectual property.

We have said that intellectual property is, of course, going to remain with those who develop it if they seek to own it. As I said in my evidence session, that is a matter of international law. We have made it clear that the developed and the developing world need to work together to be able not just to transfer technology, but to develop technology together. That is the way to make it possible to enable developing countries to gain from the development of new technologies without them having to wait until everything has been done and then pay a high price to acquire it.

Such collaboration, which we have sought repeatedly and will continue to promote, will make it possible for new technologies such as CCS to be developed alongside the needs of developing countries and in joint projects—we foresee partnerships.

We want to encourage everything of that nature that will make this possible. It is not only the financing of the purchase of technology developed in the developed countries that is so difficult for developing countries; it is also the lead times. We cannot afford for developing countries to wait until developed countries have done all the work, gained all the benefit and established the price, and then expect them to take it from us. There has to be a developmental process running in partnership between developed and developing countries. That is well understood by companies, many of which now participate willingly, productively and positively in international forums where ideas of CCS are continually rehearsed.

I hope that I have answered the questions raised by the hon. Gentleman. I know that in speaking to the earlier amendment I failed to respond to my hon. Friend the Member for Southampton, Test. Perhaps I might do so now. For the record, the aim is for the amount raised through the levy to be as near as possible as to the amount required for the projects. There is no intention to develop a central pot, and all moneys raised will be spent on the CCS demonstration project.

Tobias Ellwood (Conservative, Bournemouth East)

The House of Commons Library notes on the Bill have that figure at about £9.5 billion. Whatever the figure is, it is to be calculated in detail in future. While there are stipulations requiring the Minister or the Secretary of State to come to the House to announce various changes as the details are confirmed, will the Minister give the Committee a guarantee that an update of the levy, the process and the entire CCS project as it is rolled out will be provided to the House on, say, a six-monthly basis, perhaps in a written statement, but certainly annually as an oral statement, so that we can be aware of how this huge project costing the taxpayer about £9.5 billion is progressing?

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Gentleman will forgive me if I do not give a commitment in such specific terms. I am more than aware of the number of consultations that will happen as we progress, which will be available to hon. Members. They are often subject to questions and statements in the House. We have the annual report of the Committee on Climate Change, to which the Government are obliged to respond and will do so. We have just had the first one. Our response will be made soon, and there will be a continual process of reporting on all aspects of CCS. I have not the slightest doubt that that will be the case. I confirm that we expect that the amount raised could be as much as £9.5 billion. We envisage CCS being supported to that order of magnitude.

I hope that I have dealt with the issues raised in relation to amendment 4. I further hope, therefore, that the hon. Member for North Southwark and Bermondsey will not press the amendment to a vote.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister’s answer was helpful. I now understand that paragraph (g) enables information to be given internally from the companies to Ofgem and that the patent issues are dealt with in another way. I am grateful to her for that response.

May I make one point before seeking permission to withdraw the amendment? I endorse what the Minister said about the importance of the developing world not waiting until all the technology is tested to completion in the developed world. One way the Government could assist is to indicate in the competitions that they would look favourably on those consortiums, which would include companies, or collections of companies from the developing world. For example, there are companies across southern Africa, where there is a lot of coal production, that would be welcome partners. India, which has significant coal production, would clearly be a welcome partner. The Minister need not respond now, but will she talk to her colleagues in the Department for International Development and other Departments about how we might encourage the participation of and collaboration between companies based in the UK or Europe and companies in the developing world, particularly through Commonwealth links?

The Minister is right that, if there is something the end of a project that can be immediately taken—and adapted, possibly with some change—to India, southern Africa, Latin America or elsewhere, it will be of huge advantage, because it is everybody’s carbon emissions that we need to bring down, not just our own.

I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Briefly, will the Minister take the opportunity afforded by the question put by my hon. Friend the Member for Harrogate and Knaresborough to talk about the companies that will be charged the levy? There is the question whether the levy deals with imports of electricity. It would be helpful if she expanded on the levy’s remit.

Also, I want to press the Minister a little about the parameters of the amount of the levy. She does not have to be precise, but the Government must have ballpark figures. I am not seeking to tie her down, but everybody has a significant interest in this issue and it would be odd if we never explored it further and never got any figures on the record.

Charles Hendry (Conservative, Wealden)

This is one of the most important clauses in the Bill, in terms of how the whole thing will be paid for. We have had a useful debate on the amendments that we have dealt with so far and we spotted for just one moment there that the Minister did not have her customary mastery of her brief.

I want to probe the issue a little further. The Minister will recall that, in our evidence sessions last week, I talked about whether this money could instead be found from the receipts from the EU emissions trading scheme that Britain will receive in due course. I asked where we could find evidence that that money was already allocated. One of her officials helpfully pointed to the Budget 2009 report and said that it was dealt with in table 2.9, under other taxes and royalties. That column shows that, in the coming years, that sum will go from £16.8 billion in 2009-10 to £19 billion, before falling to £18.8 billion, then rising again to £20 billion in 2012-13 and to £21.8 billion in 2013-14.

However, the only additional information that that table gives is that that section on other taxes and royalties says it includes VAT refunds and money paid into the national lottery distribution fund. Something as important as Britain’s receipts from the EU ETS is not even mentioned in the footnote.

As we continue to debate the clause, I would be grateful if the Minister was given some information on the exact amount in each of the years that I referred to that the Treasury is assuming it will receive from the EU ETS. Simply to lump that money together with those other sums is completely unacceptable and much too broad; we need much greater detail.

I hope that that information is forthcoming, because during our pre-briefing session on the Bill I indicated to her ministerial colleague, the Under-Secretary of State for Energy and Climate Change, that I wanted those figures. I asked for them last week and we need to be absolutely clear whether money would be available through the EU ETS receipts for this sort of work, because that would be an alternative to the levy and the consumer and the taxpayer have a right to know what alternatives have been explored.

However, the clause and our debate show some of the challenges of vague legislation. What we see here is an extremely broad power, but we have not been able to gain much clarity about who will be caught by it. Subsections (3) and (4) clearly give scope to vary the extent to which different groups of consumers will be affected, but we gained no concept from this morning’s debate whether that means that people who might obtain their electricity from coal-based supplies will be affected, so that the dirtiest and most polluting sources of electricity might pay a lower levy; whether people who have opted for renewables tariffs might pay less or nothing; or whether people getting nuclear power might pay less or nothing.

Any of those people could benefit from those powers in the Bill, but we have no real understanding of what the Government’s intentions are in this area. We have no knowledge as to whether they intend that large users should be helped in some way or whether small businesses and consumers should benefit. The Government clearly have the power to make choices on the different levies to be imposed, but we do not know what is intended.

I always have a concern about legislation that is drafted in broad, general terms, where the detail will be supplied through secondary legislation. There is a sort of regulatory creep: there is an intention that one thing should happen, but a few statutory instruments down the line that is broadened out into something that was never really considered by the Committee and was never really intended by the Government or by Parliament to be the purpose of the particular clause. Therefore, we would be grateful for more information from the Minister about how she sees the levy being imposed and what it will entail for which sections of the community.

I would also be grateful if the Minister expanded her comments last week, when I asked her whether there will be a contract for difference. She implied that the Government were still thinking about that area. The evidence that we heard from Dr. Jeff Chapman of the Carbon Capture and Storage Association clearly shows that he thinks it is a done deal, as it will be a contract for difference, and therefore, as the cost of carbon rises, the levy to the consumer will reduce. If that is not the intention, there is a risk that the consumer will pay twice—through the carbon price, which is a carbon levy-type system, and through the levy on top.

We owe it to consumers, who are feeling very hard pressed, to make it clear to them that in the event that there will be charges, as one charge rises, the levy will be reduced to compensate.

Joan Ruddock (Labour, Lewisham, Deptford)

Obviously, I want to go over what clause 4 does, but let me first answer the questions that have been put to me.

On the amount of the levy, we have said clearly that it could be worth between £7.2 billion and £9.5 billion. It is not possible for us to go further to say what the figure will be, because we have to raise an amount that will match the needs of the projects and we do not know what those needs are. We have not yet seen them, but when we do, we will be in a much better situation to get to the fine detail of the levy, and, as I keep saying, they are all subject to consultation.

On who will be caught, the levy is on electricity suppliers, and the licensed suppliers will make those payments. I think there is no need for further clarification. I am afraid that my instincts were, for a second, quite wrong in not thinking quickly enough about imported electricity. However, it is obvious that on the supply of electricity it does not matter whether it is imported or indigenously produced—it will be subject to the levy. The opposite is true of exported electricity, which may well not be subject to the levy. That is a matter under debate.

The hon. Member for Wealden repeatedly raised questions about the EU ETS receipts. This has been a matter of concern to me, and I have made many inquiries to try to get to the bottom of it. I can give him further information, although it will not satisfy him.

Charles Hendry (Conservative, Wealden)

Try me.

Joan Ruddock (Labour, Lewisham, Deptford)

Indeed, I must. The EU ETS receipts are not published separately because EUROSTAT, the EU’s statistical agency, has yet to take a view on how those receipts should be classified in the public finances. We believe that it would be inappropriate to publish the receipts in advance of EUROSTAT’s decision. [Interruption.] I can hear groans because of that answer. However, I must give hon. Members the real answer. What we have tried to do, as a Government—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Will the Minister give way?

Joan Ruddock (Labour, Lewisham, Deptford)

In a moment. What we have tried to do as a Government, notwithstanding—

Peter Atkinson (Conservative, Hexham)

Order. I am afraid that hon. Members will have to be patient as it is 1 o’clock.

Joan Ruddock (Labour, Lewisham, Deptford)

I was in the middle of dealing with questions about EU emissions trading scheme receipts asked by the hon. Member for Wealden and had explained, somewhat to the dismay of certain members of the Committee, that the problem was that we did not yet have a decision from EUROSTAT—the EU statistical agency—on how EU ETS receipts should be classified in the public finances. For that entirely reasonable reason, we were not able to publish them in advance of such a decision, but we had tried to provide some information. That has been done—the hon. Gentleman is aware of this—by including the receipts in other taxes and royalties in that line in the relevant tables in Treasury publications. I understand why he considers that unsatisfactory, and we have gone further to indicate the sorts of moneys involved. Those moneys are put as public finances forecasts in the Budget and pre-Budget report and are based on the likely number of allowances and the secondary market price for carbon.

The hon. Gentleman may or may not be aware that the 2009 pre-Budget report noted that, to date, UK carbon auctions have raised more than £350 million and that future revenue was set to rise to about £2 billion in 2013-14. Those moneys are contained in the Consolidated Fund, and as with other moneys, which are raised in a variety of ways, they are, of course, used to fund the Government’s programmes. They therefore constitute public finance. If we took the money from those sources, we would essentially be using public money directly to fund the CCS projects, but our preference is to put the obligation on electricity suppliers, paid for by the suppliers in the form of a levy. I do not know whether the hon. Gentleman seeks further clarification, but I assure him that that is as much information as I can provide him with.

Charles Hendry (Conservative, Wealden)

I am very grateful to the Minister; she has been genuinely seeking to be helpful. On the UK carbon auctions to which she refers and the figure of £2 billion for 2013-14, it would be helpful if she let us have—not necessarily immediately because she may not have it—the corresponding figure for each year from now for the whole Budget period. As a result of auctioning the EU ETS allowances, do the Government expect to raise other amounts that would come to the UK on top of those figures or would that be the totality of them?

Joan Ruddock (Labour, Lewisham, Deptford)

Unless I stand to be corrected, I imagine that that would be the totality of them. It is not obvious to me where else moneys would come from. The hon. Gentleman will be aware of the EU raising finance through allowances from the new entrants reserve, which will fund some EU projects, but that is a separate matter, although the UK will benefit because we will undoubtedly have EU-funded projects in the UK. That is our expectation.

I think that I have explained the situation and given as much information as possible, but it is important to distinguish, for the matters covered in the debate, the fact that the Government’s position is not to take public funds directly to fund projects 2 to 4—and, indeed, project 1 now—but to do that through the levy system. Of course, that is the matter that we have been debating.

I was asked about the contract for difference, and I said that I would attempt to answer that question before going on to the main stand part debate. The hon. Member for Wealden raised the matter and related it to the carbon price. He is right to point out the benefits of a contract for difference related to the carbon price. Clearly, over time, the amount of payment through the levy could therefore conceivably reduce, which would be an obvious advantage.

We have consulted on the matter and two proposals were put last year. One proposal was the contract for difference, linked to the quantity of CO2 abated, and the other was to make an additional payment linked to the amount of CCS electricity supplied. We need to do further analysis with the Treasury, and we will, of course, need to take a decision in time for the launch of the competition for further projects. So there is no final decision on that, but we share the hon. Gentleman’s view that there could be an advantage in the contract for difference linked to the carbon price.

I also want to raise a matter discussed this morning. Questions were asked about which suppliers would have to pay the levy. The debate was about large, small and local companies and so on, and in seeking to clarify, I indicated that the levy would be imposed only on licensed suppliers. That is indeed our preferred course.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

But.

Joan Ruddock (Labour, Lewisham, Deptford)

But we do, of course, have to consult. Therefore, it was premature of me to say definitively that we will do it that way. For the sake of accuracy and clarity, let me make it clear that that is our current intention, but it will be subject to consultation.

Anne Main (Conservative, St Albans)

I thank the Minister for giving way, as I raised that point with her earlier in her speech this morning, when she said that perhaps very large suppliers would have a different tariff. Does she imagine a multi-tiered approach to levies, perhaps going from the largest to the smallest provider?

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Lady is confusing suppliers and supplies. I think that she is referring to when I mentioned representations from intensive users. It is the people receiving the largest amount of supplies who have made representations that, for example, there could be a ceiling on the amount of supplies that should suffer the levy. That goes back to the suppliers, but those who use the electricity have made those representations. This is not a distinction between large and small supply companies.

Brian Binley (Conservative, Northampton South)

I am grateful to the Minister for that explanation. I asked about and relationship between suppliers and the levy on big users, because costs proportionately fall more heavily on the smaller than on the large business. I asked but did not get a clear enough answer. She has now clarified the situation to the extent that I need more clarification with regard to my question.

Joan Ruddock (Labour, Lewisham, Deptford)

Everyone is suggesting that they are confused. Let me be clear: I am not saying anything absolute on this matter. I simply raised this issue—regrettably perhaps—and admitted to the fact that we have received representations from people who are heavy users and want some limit on how the levy paid by the supplier companies will impact them. I am not in a position to give the hon. Gentleman any further information. We have provisions in the Bill, and I have made it clear that we have no intention to exempt at the moment, despite representations from a variety of sources—including renewables, which we also discussed—with the sole exception of exported, not imported, electricity. We will not be looking to exempt. That is the position now, but things may change substantially; we are in a new field altogether, as regards the economics and the progress of the project. I am afraid that I cannot help the hon. Gentleman further, and I hope that I am not making things more complicated by what I have just said.

Tobias Ellwood (Conservative, Bournemouth East)

Will the Minister give way?

Joan Ruddock (Labour, Lewisham, Deptford)

I will, but we are in danger of complicating things and not moving any further. There is a limit on what I can say at the moment, but I stress again that we will have to undertake further consultation, including on the regulations.

Tobias Ellwood (Conservative, Bournemouth East)

It is exactly a question about consultation that I want to ask. Who will conduct the consultation? Does the Minister envisage the new office of carbon capture and storage taking that on, or will the Department push it through?

Once we complete our debate here and the Bill, hopefully, becomes an Act, the details of the discussions will be lost until we get more direction from either the Minister through a statement or the new office. If a company that supplies electricity has a mix of one third-two thirds, where one third comes from a renewable source that produces no CO2 emissions, will that have any effect on the size of its levy?

Joan Ruddock (Labour, Lewisham, Deptford)

I have made it clear that there is absolutely no intention at the moment to exempt the supply that is derived from renewable sources. I have made that absolutely clear throughout the debate; it is not an area of confusion.

On the other question that the hon. Gentleman posed, the consultation will be a formal Government one in the normal way. The Government will set out proposed plans for regulations, and they will be part of a formal Government consultation, which will take the normal 12 weeks. The Government will, of course, publish the results, as is normal, and respond. [Interruption.] Perhaps I am not the one to sit down. I think and hope that I have succeeded in answering the questions that were outstanding at the point at which we were interrupted.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

May I remind the Minister of one? I asked her about the cost. What will be the total amount of the levy and the cost of the project? How much will people have to pay? I would be grateful for her answer.

Joan Ruddock (Labour, Lewisham, Deptford)

I have answered the question, but the hon. Gentleman may not have found it sufficient, because all I provided him with was the total sum and the range, which we think, from memory, will be between £7.2 billion and £9.5 billion. That is the amount of money that would be raised by the proposed levy. How that will be disbursed and exactly where in that range we will end up depends on the actual projects and their nature. Until we know that, it is impossible to arrive at the final sums. So I say again that I am honestly giving the Committee as much information as possible at the moment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

That is the global cost, but the other question in which consumers will be interested is what it will add to the bill. Can the Minister give us parameters for that?

Joan Ruddock (Labour, Lewisham, Deptford)

I think I can do that. We have suggested that we are probably looking at a 2 to 3 per cent. increase in bills, looking towards 2020—about £15 to £17 per annum per consumer. There will be no immediate effect on bills and, probably, no significant effect before 2015, which is quite far off. We are concerned about any addition to customers’ bills, but we have to see this in the round and see what we can provide for customers. Energy security is, very topically, what consumers will want and we believe that this is a substantial way of providing that energy security and appropriate energy mix.

The clause gives the Secretary of State the power to raise funds, based on the provision of financial assistance to CCS demonstration projects, which could include support for the retrofit of CCS to the full capacity of the power stations hosting the demonstration projects, should a decision be taken to do so in the future. Those funds will be raised through the charging of a levy on electricity supplies, with the levy to be paid by electricity suppliers.

Tobias Ellwood (Conservative, Bournemouth East)

I am grateful to the Minister for giving way and appreciate that I am testing her patience early in the proceedings. If we create a technology that is not only successful here but is exported to other parts of the world—which I think is what she implied earlier—is there any mechanism by which the taxpayer would benefit by getting some form of rebate? Is there any way—through patents or other methods and financial structures—in which this amount, which could be up to £9.5 billion, could be repaid to the taxpayer?

Joan Ruddock (Labour, Lewisham, Deptford)

The taxpayer will get value for money, if this succeeds, in energy security. The taxpayer would get benefits from any form of exports; there are jobs in exports. I have no doubt that there are benefits for taxpayers. I do not envisage at the moment—though one can never say never—a means of clawing back money. If under the contract payments are made according to differences in the carbon price, that will properly reflect how well things are going in the market. We are going down the route of a levy only because we understand that these projects would not be commercially viable unless the payments were made. Therefore, we have to be prepared to commit that money and to bear the burden—I have indicated that it will not be huge, but there will be a small increase in consumer bills in due course—because of the benefits that will accrue overall. We would not envisage trying to claw back; we are trying to give people confidence in going ahead with these projects, with support. We want to do that as efficiently as possible and at the best cost. None the less, I do not anticipate what the hon. Gentleman suggests.

The clause sets out a non-exhaustive list of matters that may be covered by the regulations governing the levy mechanism. In particular, provisions allow the regulations to prescribe to what types of supplies the levy will apply and the suppliers who will be liable to pay the levy. Provisions under the clause will also allow for different rates of levy to be set in different cases. The clause allows for measures to apply relating to the enforcement of the levy, including the penalties for late or non-payment.

Before making regulations under the provision, the Secretary of State must consult the administrator and such other persons as he considers appropriate. Importantly, regulations must be laid in draft and approved by both Houses of Parliament before they can be made, ensuring that Parliament will have the opportunity to scrutinise the detailed provision made about the levy. The provisions in the clause are required to set the framework for the levy mechanism needed to support UK demonstration of CCS.

Charles Hendry (Conservative, Wealden)

We have had a useful debate, and I am grateful to the Minister for the extra clarification. We will not seek to block the clause, but we would prefer funding for the developments to come through the EU ETS. I recognise that she has given further guidance, but we think that that is a new source of funding that does not add to consumers’ bills at this time. Consumers are already anxious about their bills, and an additional levy must inevitably cause some complications.

Joan Ruddock (Labour, Lewisham, Deptford)

Does the hon. Gentleman not follow my argument that if he were to take money that has gone to the Consolidated Fund—receipts from auctions—he would deprive other areas of public finance, such as schools and hospitals, which are very much needed and will continue to be needed in the future? Whichever way he looks at it, the small amount that the levy would put on people’s bills would be completely offset by his proposals directly to take public funds, which would be much worse.

Charles Hendry (Conservative, Wealden)

What has been clear in our discussion is that the funding is opaque. If we look at the budget book and the documentation, it is difficult to see exactly how much there is. Today, for the first time, after months of asking for information, we have had some detail on how much money is assumed to come from the EU ETS. We need to look further at how that is allocated. We cannot do that at this stage, and we do not seek to do so. However, it is a means of avoiding a levy on consumers, which would have been nice.

The Government are determined to pursue the levy approach. We will not seek to block that, because, in the event that money is not available through the EU ETS, it provides certainty to industry that funding will be available.

Clause 5

Brian Binley (Conservative, Northampton South)

In our debate on clause 4, the Minister said—we all welcomed it—that the intention should be set out in the Bill so that it is clear. I would hope that the same could be said about clause 5, but I fear that its intention is not clearly set out, and therein lies my concern.

Under the clause, the Government intend to change the authority that is responsible. I accept that, and it seems sensible that we should have an authority responsible for the whole clean coal issue. I think that we would all welcome that, but what changes have the Government thought about? What is the time frame for the changes, and what sort of authority will it be? Will it be a regulator? We need to know more about that.

My real concern, however, is the explanatory notes, which state that the clause gives the Secretary of State power, through regulations, to transfer the function of administrator to another body, “including to himself” or, indeed, herself—a further growth in ministerial power over a rather sensitive area. Does that give the Secretary of State the right to increase or change the levy, and, if so, in what way? We need to understand that, because “levy” is simply another word for taxation. What powers would it give a Secretary of State? I assume that it would give all the powers given to the authority, but I want that to be clarified. What do the Government envisage if the measure is enacted? If they do not have a view, I wonder why this provision is in the Bill.

Anne Main (Conservative, St Albans)

My hon. Friend makes a very interesting point about this quite complex situation. If someone is unhappy about the operation of the authority, to whom do they appeal if the powers have been given back directly to the Secretary of State?

Brian Binley (Conservative, Northampton South)

Given the questions that I am asking, I fear that I am not competent enough to answer my hon. Friend’s question, but no doubt the Minister has taken it on board and will be kind enough to respond. There are serious concerns about the inclusion of the phrase in the Bill. The Government must believe that there might be a need to transfer power to the Secretary of State. Therefore, we need to know why that might be necessary. Will the Minister be kind enough to make the clause’s intentions clear?

Joan Ruddock (Labour, Lewisham, Deptford)

The provisions relate to the administrator of the CCS financial support mechanism. A number of elements make up the financial support mechanism: the raising of funds through a levy on electricity supplies, the making of incentive payments to CCS projects and the monitoring of the assistance schemes under which assistance is provided. The elements clearly create a need for an administrator to carry out the functions necessary to administer the levy and payments to projects. We believe that Ofgem, the regulator of the electricity supply industry, is well placed to carry out that role.

The clause therefore appoints Ofgem as the administrator. At the same time, it provides, as the hon. Gentleman said, that the Secretary of State has the power to transfer the functions of the administrator to another public body if required. That will enable the Secretary of State to take account of any future change in circumstances that might make it appropriate to transfer the function of the administrator to another body.

In our evidence sessions, we discussed whether a new body would be necessary in the future; I think that the Conservatives had proposed that new body. At the time, I said that the creation of such a new body was premature, but this is a long-term programme that takes us to 2020, conceivably with levy payments and conceivably adding retrofit payments. We are therefore probably talking about a period of potential financial support of, say, 15 years. Therefore, it is clear that we need to have an open mind about what might be necessary in the future. However, let me be absolutely clear that it is our settled view at the moment that Ofgem has the appropriate expertise, and indeed Ofgem is being appointed under this clause.

Charles Hendry (Conservative, Wealden)

Does the Minister not accept our concern that this measure makes the Bill rather narrow? We understand that the funding mechanism will be fundamental to the projects being developed. However, there are many other aspects, in terms of organising the funding mechanism and its strategic deployment, that will have to be overseen, and there will have to be an organisation to do that. Therefore, does it not make sense to make provision for that, rather than perhaps needing new primary legislation to set up another body when the matter becomes much more urgent? I think that we can all see the need for that new body. Industry sees the need for it, so would it not be sensible simply to have the power to create it available?

Joan Ruddock (Labour, Lewisham, Deptford)

I will be happy to consult officials outside the Committee, but I am not aware that there would be need to be primary legislation to set up another body that might have the functions that the hon. Gentleman has just referred to. This measure is narrow and specific for good reason: to ensure that the moneys can be raised and disbursed appropriately and that monitoring can take place. We believe that Ofgem is the appropriate body to do that. Indeed, we have no plans at this time to make any subsequent transfer of functions.

Given the time for which we expect the projects, and what follows from them, to run, we believe that it is reasonable to have this flexibility, should it be required, although we do not currently anticipate that it will be needed. Indeed, some of the other functions that the hon. Gentleman has referred to could probably be covered by means that did not require primary legislation nor the transfer of these particular powers, because they are specific powers.

Brian Binley (Conservative, Northampton South)

The Minister is being immensely generous in giving way and I hope that we are reacting in that spirit.

The Minister will remember that we scrutinised a Mrs. Jenny Saunders, or a Miss Jenny Saunders—I do not know her marital status, actually. I questioned her on the efficacy and efficiency of Ofgem. In particular, I asked her whether she felt Ofgem was doing a reasonable job. I think that the information that I got back was that she felt that it could improve considerably.

Is the Minister therefore happy to give this power to Ofgem, or does she intend to ensure that Ofgem ups its efficiency in respect of the task she is giving it?

Joan Ruddock (Labour, Lewisham, Deptford)

My hearing of most of the witnesses, including Ms Saunders, was that they were saying that Ofgem’s functions may have left a lot to be desired in the past. However, I think they all said that it was now on a better track and had improved in recent years. We will debate at a later stage the ways in which Ofgem might take on board climate change and energy security.

I think that we are all of the view that Ofgem has perhaps not always performed as we have wished it to, but considerable improvements in performance have occurred and new directions are being pursued that are in line with Government wishes. We are therefore confident that Ofgem, which has already set up a new unit to cover a number of functions—of which the issue under discussion will be one—is equipped, experienced enough and able to do the job.

I repeat that the provision is narrow, as it needs to be; it is the task that Ofgem needs to carry out. It is the body that we are appointing through the Bill to do the relevant tasks. We do not have plans at present to change that, but we will allow ourselves the flexibility. Whether there is a need for a different public body with much wider functions—the kind to which the hon. Gentleman has referred, perhaps—and whether that would require primary legislation, will be part of our considerations in the rolling review.

I am sure that, as we progress, we will be able to make those decisions subsequently; they do not need to be taken in this Bill at present. I think that I have indicated clearly enough that the clause’s provisions are required, as they specify who will carry out the central function of administering CCS financial support.

Brian Binley (Conservative, Northampton South)

My apologies, but I did raise the issue of the information in the explanatory notes. Will the Minister refer to them? The possibility of transferring the power to the Minister, whoever that Minister might be, is a pretty important factor in this discussion.

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Gentleman and I will share the view that it is always better not to transfer additional powers of this kind to Ministers, but we have to have that flexibility should it be necessary. I have, however, indicated that we have no such plans. We could have gone along with the proposed contractual arrangements for the first project where the relationship is directly with the Secretary of State and the developer for CCS projects. We have put Ofgem in the position to do the work involved, which is important to us. We think that Ofgem is the right organisation to do it and we did not include the provision to suggest that we want to make a transfer. It is there as a protective clause for the future.

Brian Binley (Conservative, Northampton South)

I welcome the Minister’s answer, but I did ask about what sort of circumstances she envisaged the power being used in. If there are no such circumstances, why is the power in the explanatory notes and why does it exist?

Joan Ruddock (Labour, Lewisham, Deptford)

It is in the explanatory notes because it is in the Bill. I have no idea what sort of circumstances might arise, but the hon. Gentleman will understand that the expert civil servants who advise us on the issue believe that we should have such a clause. The drafters of Bills often advise that, too. I am content with that and I am not ashamed to say that I cannot enlighten the hon. Gentleman on this point at this time.

Clause 6

Michael Weir (Scottish National Party, Angus)

I beg to move amendment 16, in clause 6, page 5, line 23, leave out ‘coal-fired’.

Hugh Bayley (Labour, City of York)

With this it will be convenient to discuss the following: Amendment 17, in clause 6, page 5, line 28, leave out ‘coal-fired’.

Michael Weir (Scottish National Party, Angus)

Thank you, Mr. Bayley. These amendments stand in my name and are supported by the Conservative party.

The purpose of these amendments is self-explanatory, but it is an important issue at the heart of the Bill. It is now fairly clear that the winner of the first competition will be a coal-based plant. There are only two left: Longannet and the E.ON plant based possibly at Kingsnorth.

In discussing clause 1 this morning, the Minister stated that the next four plants were intended to include two pre-combustion plants. However, clause 6, as it currently stands, makes clear that the demonstration projects will be for coal-fired generation only, as will the additional future funding that may be available. The effect is to exclude the possibility of CCS demonstrators being on a gas-fired plant; any pre-combustion plant would have to be coal-based and not gas-based. I believe that that is short-sighted and that we should leave open the possibility of demonstration plants being either coal or gas—or other possibilities, such as biomass or oxyfuel.

I would remind the Committee that we had the opportunity to get ahead of the field with the Peterhead scheme, which was a joint venture involving BP and Scottish and Southern Energy. I have talked about that many times and I will not bore the Committee by going into great detail. Considerable investment was made in that development, which would have demonstrated the use of carbon capture and storage on a gas-fired station. It would also have generated energy from hydrogen as well as the storage of the captured CO2 in the Miller oil field. As a result of indecision, continual delay on the competition and the final decision to exclude pre-combustion schemes by the UK Government, that opportunity was lost and is now being pursued in Abu Dhabi.

We run a real danger of doing the same again by putting all our eggs in the one basket with this clause. When the Minister was asked about this issue in the evidence session, she said that coal was the most carbon-intensive fuel and that a solution was needed. No one here would disagree with that and, as the hon. Member for Northampton, South never ceases to remind us, there are many, many years’ worth of coal under our ground. We need a solution that will use that coal for energy security, if nothing else.

When asked specifically about gas, the Minister restated the importance of coal but added:

“It is not just what we can learn in this country; we need to learn from what is happening in other countries as well.”——[Official Report, Energy Public Bill Committee, 7 January 2010; c. 111, Q244.]

She went on specifically to mention what the Norwegians were doing with gas CCS.

I would draw Members’ attention to the excellent paper submitted to the Committee by Professor Gibbins. In paragraph 13, he states:

“With respect to technology demonstration elsewhere, conditions are more relevant in Norway, but low demand there for fossil fuel may hinder rapid development of gas CCS at scale. Conditions elsewhere in the world where gas with CCS is being discussed, notably the Middle East, are rather different with respect to ambient conditions and gas and CO2 prices, so optimum technology approaches may also be different there.”

In effect, neither of these may be suitable for either the conditions in the UK or the speed with which we need to get gas CCS up and running. But it seems to me, in respect of the Minister’s response, that exactly the same argument can be made about coal. Both the USA and China, for example, are pressing ahead with coal technology, mainly due to the energy mix in the countries. Indeed, the professor indicated that the first commercial plant may well be in China.

We need to look at what technology would deal with the decarbonisation of our energy supply to meet our carbon reduction targets. We undoubtedly need to have CCS for coal to unlock our vast coal reserves, but we also need to look urgently at the decarbonisation of gas.

The point was made forcefully by Professor Gibbins during the evidence sessions when he said:

“The reason why the Bill needs to take in natural gas is that it seems likely that because we now have these quite stringent targets for 2030, we will have to fit a significant amount of natural gas plant with carbon capture and storage in the 2020s. To be able to plan for that, you need to have demonstrated the technology and to have the reference plants to look at and say, “This is how it’s done,” and to be absolutely clear about what you’re doing. That’s why you would work on gas.”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 44, Q94.]

Members will be aware that a large part of our current generating capacity is gas-fired. This morning, the hon. Member for North Southwark and Bermondsey said that it was 41 per cent., while Professor Gibbins said that it was over 30 per cent. Whichever it is, it is substantial and unlikely to change in the immediate future. Indeed, I looked at what was happening at the moment, and 33 new applications for gas plants have already been granted, with a further nine being under consideration—perhaps as much as a further 10 MW of generation capacity. Even as we move towards a low carbon economy, we clearly have many existing and proposed gas stations; equally, those newer gas stations will still be operating after 2020. As Professor Gibbins states,

“while the building of new coal generating capacity before and after 2020 is still uncertain, so it is probable that gas fired plant will be the source for a major part of UK power-sector emissions of fossil carbon dioxide in the 2020s and beyond.”

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I want to confirm that the best Library note figure is that 43 per cent. of electricity is currently produced by gas, which is in the same ball park as the hon. Gentleman’s information.

Michael Weir (Scottish National Party, Angus)

I thank the hon. Gentleman for that intervention. The point stands—it is a substantial amount and is going to be for the foreseeable future.

I accept that, as the Minister also made clear in evidence, new gas stations emit less CO2 than coal, and indeed older gas stations. None the less, we need to have CCS technology for gas in place by the 2020s. The demonstrator, however, will not be up and running until 2014 and some of our witnesses were very sceptical as to whether that target would be met, which means that time is running out for gas technology. I draw attention particularly to what Professor Gibbins says at paragraph 6 of the memorandum. Forgive me, Mr. Bayley, as it is a lengthy and somewhat complicated quote, but it is important:

“The Committee on Climate Change suggests that, for the entire UK electricity fleet (i.e. an average of all generation sources, fossil and non-fossil) an overall electricity emission intensity of 70 gCO2/kWh or less will be required by 2030 (compared to an average value of around 500 gCO2/kWh now). This implies that fossil fuel plants should on average be emitting around 100 g CO2/kWh, with the lower UK fleet average resulting from the inclusion of renewables and nuclear as very low carbon options. Individual gas power plants will emit of the order of 350 gCO2/kWh at full load, but significantly more if they are running at part-load or varying load to compliment and support wind-generated electricity. Even gas-fired CHP plants can only approach an electricity emission intensity of 200 gCO2/kWh, and then only for ideal operating conditions and location with full heat/electricity matching and with an acceptance of an accompanying CO2 emission from heat production. It is clear, therefore, that any gas power plants running for extended periods in 2030 (as well as coal plants) will need CCS in order to achieve emissions of 100 gCO2/kWh or less”.

That is the important point: we will still be using gas plants into 2030 and possibly beyond, and the older a plant is, the more CO2it will emit. Given that older plants in particular may be put over to peaking or emergency duties to back up other sources, they will emit more CO2, if I understand correctly.

The professor goes on to say that we cannot be certain of the position between 2020 and 2030:

“but in this uncertainty fossil fuel, and particularly gas, is in effect being used as a de facto insurance policy to keep the lights on if other options fail to deliver—and ensuring that CCS is developed in time for widespread rollout from around 2020 is, therefore, the insurance policy to make sure that the UK CO2emission target set by the Committee on Climate Change are met.”

It seems to me that we have to take account of gas. We cannot put all our eggs in the one basket of coal, important though I accept coal is.

One other potential problem that in my view shows a slight lack of joined-up thinking is the overarching national policy statement on energy, which is of course part of the national planning framework. Section 4.7.1 of that statement, dealing with carbon capture storage readiness, states:

“To ensure that no foreseeable barriers exist to retrofitting carbon capture and storage (CCS) equipment on combustion generating stations, all applications for new combustion plant which are of generating capacity at or over 300 MWand of a type covered by the EU’s Large Combustion Plant Directive (LCPD)should demonstrate that the plant is ‘Carbon Capture Ready’ (CCR) before consent may be given. The IPC must not grant consent unless this is the case. In order to assure the IPC that a proposed development is CCR, applicants will need to demonstrate: that sufficient space is available on or near the site to accommodate carbon capture equipment in the future; the technical feasibility of retrofitting their chosen carbon capture technology; that a suitable area of deep geological storage offshore exists for the storage of captured CO2 from the proposed combustion station; the technical feasibility of transporting the captured CO2 to the proposed storage area; and the economic feasibility within the combustion station’s lifetime of the full CCS chain, covering retrofitting, transport and storage.”

Section 4.7.3 then states:

“If the IPC, having considered these assessments and other available information, concludes that it will not be technically and economically feasible to retrofit CCS to a proposed plant during its expected lifetime, then the proposed development cannot be judged to be CCR and therefore cannot receive consent.”

It seems to me that that runs a real danger of preventing the future development of gas-fired plant because of the lack of proven CCS technology—unless, of course, we invest and make sure that that technology is available and working. Making an assessment of the technological and economic feasibility of retrofitting the technology to a planning application is impractical and likely to produce a meaningless assessment. Without knowing the costs, it is impossible to specify objectively what is economically feasible.

As I said at the outset, given that the clause as it currently stands only refers to coal-fired generation, anyone wishing to use CCS on gas plants will have to prove economic feasibility without subsidy. I would also point out that as the IPC is due to come on stream before the first demonstrator plant, that will have potentially serious impacts on developing new gas plants.

For all those reasons, I believe that we should accept the amendment to the Bill and ensure that we at least leave open the possibility of CCS from gas and other fuels. We should not be restricted to coal alone; that might have the consequence—I was going to say the unforeseen consequence, but it can be foreseen—of serious difficulty in the years ahead.

Charles Hendry (Conservative, Wealden)

I congratulate the hon. Gentleman on moving the amendment in that way. This is a very important part of the Bill, and how we approach the whole subject is also important. This can either be a rather lame Bill, which moves us forward significantly in some areas but not enough in others, or it can be a very big, bold step forward that will really change how we think about carbon capture and storage. His ambition and ours and that of many other members of the Committee is that we should be looking for the latter. We should be ambitious and create a totally new feel about CCS.

We have, I am afraid, missed the boat once before. The competition was too narrowly focused. We then missed the boat on pre-combustion, and it will be some years before we can begin to catch up in that area. The project in Peterhead that the hon. Gentleman referred to was a very sad loss. It was one of the most advanced projects of its kind in the world and was ultimately lost because of the lack of Government support.

Our challenge must be to not make the Bill too restrictive. We should seize the opportunity, going for the whole range of technologies that may be out there, and doing what we can to make them happen. The challenge for the Minister is to make this a leap forward, rather than a gradual inching forward. The danger is that CCS will develop in coal-fired generation capacity as a result of the Bill, but that its potential development in gas-fired generation will be stifled because it was not included in the Bill. We will then have to wait for another piece of primary legislation to make it possible, while others around the world will develop the technology. We will be stuck in a time warp, because of our failure to make the Bill fit for purpose.

If enacted, the Bill will be there for all time until replaced by something else. The proposed levy is not time-limited, and there is no sunset clause. Unless the Bill is repealed in 30 or 40 years’ time, the levy will still be imposed, yet its sole purpose is to help to develop CCS technologies at the pilot stage. At that point, it will clearly not be applicable for coal. Even after a decade, it will not be applicable for initial development. However, it would be applicable to gas, and we must ensure that it is as broadly based as possible.

It was important for us to listen to the evidence given last week. Above all, the reason for those evidence sessions is to call before the Committee those who have unparalleled expertise and to hear their views on how to make the proposed legislation better.

I shall quote Professor John Gibbins again. He said:

“The reason why the Bill needs to take in natural gas is that it seems likely that because we now have these quite stringent targets for 2030, we will have to fit a significant amount of natural gas plant with carbon capture and storage in the 2020s. To be able to plan for that, you need to have demonstrated the technology and to have the reference plants to look at and say, “This is how it’s done,” and to be absolutely clear on what you’re doing. That’s why you would work on gas.”

In a further exchange, Professor Gibbins was being questioned by the hon. Member for North-East Derbyshire. She said about gas:

“So the answer is yes—you would want a separate demonstration project.”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 44-47, Q94 and 101.]

Professor Gibbins replied: “Correct.” The professor is one of the greatest pioneers and developers in the country and internationally. His expertise clearly suggests that we should use the Bill not only for coal but for gas.

We know for certain that carbon capture will be necessary at some point if we are to meet the legally binding carbon reduction requirement of 80 per cent. by 2050. That target can be reached only if we apply CCS to gas-fired power stations. We know that now, so we should use this opportunity to plan for it now and to put in place a mechanism that will make it possible.

John Robertson (Labour, Glasgow North West)

The hon. Gentleman makes a good argument. However, I wonder whether there is a priority for coal, whereas gas does not have the same sort of power. If I remember rightly, no one said in evidence that gas would not be used in future, but the priority now and the urgency is for coal.

Charles Hendry (Conservative, Wealden)

The hon. Gentleman is absolutely right that the urgency is for coal, but the Bill is specific. It is only for coal-fired generation. The Bill specifically excludes gas-fired generation. Although we completely agree that the priority should be for coal, we do not want to exclude gas when it becomes the priority. We agree about the priority, but it is a mistake to close options when we can see that they will happen before long.

Michael Weir (Scottish National Party, Angus)

Does the hon. Gentleman not agree that, taking clauses 1 and 6 together, the next CCS demonstrator plant must also be coal-based, thus effectively ruling out gas for the foreseeable future?

Charles Hendry (Conservative, Wealden)

I thank the hon. Gentleman, who makes a valid point. One aspect, which could be covered now or in a clause stand part debate, is that I am not persuaded that the Bill allows pre-combustion technology at all. My definition of coal-fired generation is that coal is burned to create the electricity; by definition, therefore, that is only post-combustion technology. I hope that the Minister can provide us with some legal guidance to say that, where we gasify the coal and burn the gas, that will still be considered as coal-fired generation. So there are areas where we need greater clarification and guidance.

Joan Ruddock (Labour, Lewisham, Deptford)

I can answer immediately: the hon. Gentleman is correct.

Charles Hendry (Conservative, Wealden)

If that is the case, there is no such definition in the Bill. When the definition of coal-fired generation is given in the Bill, it does not make that clear. I ask the Minister to reflect on that point and to come back with an amendment, perhaps on Report, to change the definition so that it is clear, beyond any doubt whatsoever, that that is the case. We need to address this point not only because of the development of gas, but because a range of other technologies and uses could generate carbon capture and storage and one might wish to assist their development at some point.

Brian Binley (Conservative, Northampton South)

Would not the inclusion of gas give a message that is wider than the message that the Bill gives? Would it not tell industry and commerce that this development is very much on the cards and could happen irrespective of whether the Government want to be involved with any of the funding and so on? If there is a feeling that it could be on the cards, might not industry itself take up the challenge?

Charles Hendry (Conservative, Wealden)

My hon. Friend could not be more right. The opposite of that point is that businesses looking to develop gas-related CCS anywhere in the world will look at the Bill and say, “Britain is simply not interested in doing this, and we are specifically excluded from any funding mechanism”. Therefore, they will look to other countries in which to develop gas-related CCS. Once again, it will be a case of catch-up and trying to say, “Okay, we had a potential lead; we have lost it. How do we catch up again?” The very simple change that is proposed by the hon. Member for Angus would enable us to put that debate to bed, so that people around the world would say, “Look, Britain wants to lead in coal-fired CCS, but if you are interested in gas-fired CCS, Britain is the place to look to do that as well.”

The other aspect of this issue is that CCS will be relevant to a range of other uses that are not directly related to electricity generation. In particular, I refer to major industrial users—for example, the chemical industry, including aluminium smelters—that need to create an enormous amount of heat. Traditionally, they do that by burning coal or gas. In time, if we are to deal with our industrial emissions issues, those users will also need to have CCS.

We need those types of businesses to invest in Britain. If we are considering a cluster approach, we should be looking, for example, at the Humber area and nearby Teesside, which are areas that have incredible expertise in the chemical industry. We should say that one of Britain’s great strengths would be to have a cluster based on the Humber, where companies investing in the chemical sector could to tap into a pipeline to develop CCS technologies to show that we can undertake some of the most polluting industrial activities in a clean way in Britain. That would be a wonderful message to send to the industrial world, but it would not be permitted if we do not make this change to the Bill.

We are very keen to see CCS technology developed as broadly as possible. However, this is the moment when the Minister has to decide whether she wants to be timid or bold. The funding mechanism is a big step forward—we completely accept that—but she can either say that her vision for CCS is for coal or that her vision is for coal, gas and other industrial uses. There is no downside to this change. In the early stages, the levy could be used entirely to assist coal-fired generation, but its use could then be permitted to support other technologies in the future.

The Under-Secretary of State for Energy and Climate Change says that fuel poverty is the issue. There is no issue of fuel poverty in this regard, because the levy would be set at exactly the same level. The Government would then use that income, but when it was no longer required for coal-fired generation, it could be adapted to be used for gas-fired generation. To suggest that the issue is fuel poverty is a red herring—it is not correct. We are looking for a bold response from the Minister that will make the Bill much more important and impressive.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I support the amendment tabled by the hon. Member for Angus, which is supported by the Conservatives. It is consistent, and accepting it is one of the bold things that we want the Minister to do with the Bill, but not the only one. It would do an obvious thing: as well as changing the breadth and the width of the technological future of CCS in the Bill, it would also increase diversity, which is what Ministers talk about all the time. When we talk about energy security, the phrase that normally follows is, “We therefore need diversity of supply.” It seems that by going down only the road of coal CCS technology, which, yes, is the obvious one to start with, we are putting all our eggs in one basket.

Although that is the obvious place to start, all the evidence that we have all received makes it clear that we will have significant gas contributions to our energy mix. That produces emissions, too, and can use this sort of technology. Why not get the scientists and the technologists to work on solutions to everything? As the figures make clear, if we can capture and store, which the UK has the capacity to do, emissions from not just coal-fired power stations but from other energy sources, we could deal with 90 per cent. of emissions from energy generation. Therefore, I support the amendment, and I hope that the Minister can be positive and see the merit of modestly amending the Bill—the amendment will not affect its structure—sending out a different signal and opening up a lot of positive response from the industry, science, technology, our engineers and the international community.

Tobias Ellwood (Conservative, Bournemouth East)

I, too, support this crucial amendment—one of the most important ones that we are discussing today. At this juncture, we can ask ourselves whether the Bill is an opportunity to simply catch up with the rest of the world in respect of CCS or to leapfrog ahead. So I congratulate the hon. Member for Angus on introducing the prospect of including gas as a possibility for CCS.

The feeling among the Opposition is clear, and I think that if we put Labour Members against the wall, they would agree, too. I would be saddened if they were forced by their Whip to deny this opportunity to include such a major improvement to what is considered an adequate and important Bill, but is nevertheless not as strong as the nation expects us to deliver, considering the pressure that we are under to meet some ambitious targets. The Government have talked an awful lot about meeting targets for 2020 and 2050. The idea is to take the action required to ensure that those targets are met. The amendment is a critical step forward.

If we paused for a second and looked at coal, I would be pleased but amazed if any of the processes were up and running by 2014. As the evidence suggests, 2017 seems a more likely date. With that time scale in mind, it seems strange that we are not looking over our shoulder to the other giant contributor to our energy—gas—and realising our desire to ensure that technology is developed and the expertise grows, so that we can harness that technology to capture carbon in the same way as we plan to do for coal.

Anne Main (Conservative, St Albans)

My hon. Friend makes an extremely valuable point. Does he share my concern that it seems somewhat iniquitous that other producers will be expected to pay the levy and yet will have no opportunity to be part of the investment and the drive forward in such technologies?

Tobias Ellwood (Conservative, Bournemouth East)

My hon. Friend makes a valuable point. I refer to the intervention of the hon. Member for Glasgow, North-West, who said that coal should be a priority. I do not think that anybody would argue with that—coal has to be a priority. It is the dirtiest of all the natural resources that we use. However, when does the hon. Gentleman think a Bill might be introduced that will allow us to shift our attention not away from coal, but to include gas as well? I will give way to him, even though he is deliberately avoiding eye contact.

John Robertson (Labour, Glasgow North West)

No, I am not—I am making it now. I had not sought to catch Mr. Bayley’s eye, but I will after the hon. Gentleman has finished.

Tobias Ellwood (Conservative, Bournemouth East)

The hon. Gentleman obviously wants time to think about the answer. This is, however, a question for the Minister. If the Government are successful in May or whenever the election might be, when will a Bill be introduced that treats gas along the same lines as we are discussing in respect of coal? We on the Opposition Benches are saying that there is an opportunity to allow that mechanism—the legislation that I believe the nation is calling out for—to be introduced as we speak. If we do not do it now, we will have to wait for a change of Government. It will be a priority for us, but this will also be seen as a missed opportunity, because we will move from playing catch-up on coal to being behind the curve again on gas.

My hon. Friend the Member for Wealden also said that this matter will have an impact on the other dynamics covered by the Bill, such as the size of the pipes required for the clusters that are likely to develop in key parts of the UK. Including gas in the Bill would have an impact on the issue of the size of those pipes—we will address that later, in another amendment—and would almost oblige us to ensure that those pipes were of a sensible size to include the expected increase in carbon that we would have to transport.

I therefore urge the Minister to consider the amendment carefully. This matter is bigger than the individual agendas and partisan approaches that we sometimes pursue and adopt. It is about meeting our energy requirements in a safe and secure manner and reducing carbon emissions as part of the Government targets. I do not believe that we will meet those targets unless we can give the industry the green light that it needs to include at least one or two demonstration projects on gas as well as coal. I therefore ask her to accept the amendment.

John Robertson (Labour, Glasgow North West)

The hon. Gentleman’s contribution was very narrow. He seems to be content to think just of the small picture rather than the big one, and the big picture is what is happening worldwide. What happens with gas in this country is important for one reason—security of supply. Do we want to be going down the road of using foreign gas for our needs in years to come? The Government are correct in their assumption that they have to prioritise coal. The question then has to be about how we spend the money on the projects that will take place in the months and years ahead.

Do we spread ourselves thinly by having gas as well as coal, or do we concentrate on coal, which is a priority cost-wise? We have 300-plus years’ worth of coal in this country; we do not have to go abroad for it. If we can clean the dirtiest coal that is dug out of the ground sufficiently for use, we will suddenly become self-sufficient and have security before we go down any other energy road.

Michael Weir (Scottish National Party, Angus)

I do not disagree with what the hon. Gentleman is saying, but the point being made about gas is that we have the gas stations and will continue to have them for at least the next 20 or 30 years. If we are to meet our target, we have to clean them up. We need to deal with that while we wait to get the new CCS coal stations online or we will never meet our carbon targets.

John Robertson (Labour, Glasgow North West)

Well, of course there are other ways to meet those targets. The hon. Gentleman and I have had discussions about energy in a few Parliaments, and he knows my opinion that nuclear has to be part of the energy mix and will help to solve the problem.

Mr. Ellwoodrose—

John Robertson (Labour, Glasgow North West)

If the hon. Gentleman lets me answer that question first, I will let him in. I believe that at this time we have other priorities than to put money into gas. That is not to stop any companies that want to go down the road of investing in a project that they are paying for. We are talking about how much money will come from Government to assist the four projects. I can understand where the hon. Member for Angus is coming from and I believe that we will go down the gas road in the future, but I just do not believe that at this time we should be doing that.

I shall give way to the hon. Member for Bournemouth, East if he still wants to intervene.

Mr. Binleyrose—

John Robertson (Labour, Glasgow North West)

Well, I give way to the hon. Gentleman’s colleague.

Brian Binley (Conservative, Northampton South)

The hon. Gentleman is being very kind. I do not understand the argument, because it seems to me that all we are doing in proposing the amendment is opening up the option. We are not spending any money. We are not committing the Government to any action. We are simply opening up the option should it be opportune at some point.

Why does the hon. Gentleman think that the whole concept of fuel pricing and exploration has suddenly stopped? We know that there are real possibilities in the south Atlantic, specifically around the Falklands, which might be of great benefit to us. I was there only about a year ago. The possibility is exciting. The world is an ever fluid, moving, ongoing place, which is why we should keep our options open, not close them down. I wonder why that would be the case—

Hugh Bayley (Labour, City of York)

Order. Interventions need to be short.

John Robertson (Labour, Glasgow North West)

I thank the hon. Member for Northampton, South for his very short contribution. I understand what he is saying, but I happen to think that the option is open and has not been closed down. It is not in the Bill, but that does not mean that gas exploration cannot be done. I think that the option is there. It is just that the Government at this time want to put coal first and foremost in the Bill. I think that they are right to do so.

Tobias Ellwood (Conservative, Bournemouth East)

I am grateful to the hon. Gentleman for giving way; he has been very generous. I do not understand why the measure cannot be included in the Bill. Is it because the Government are being churlish? Is it simply because it was not their idea? I am asking him to stand back from that. The question that I pose to him is whether he recognises that by 2020 all the coal-fired power stations will be either pre-combustion with carbon capture and storage attached to them or obsolete, which means that the massive contribution to our energy needs will be made by gas. With that in mind, when does he see his attention turning to gas? When will he start considering the carbon capture and storage requirements for that part of the energy spectrum?

John Robertson (Labour, Glasgow North West)

The hon. Gentleman makes a fair point. I happen to think that with the rules that will, in the years to come, curtail our use of coal as it is at present, and therefore run down our coal-fired power stations, we will be left in a particularly difficult position in which we will have to use gas in large quantities, but it will not be British gas. It will be gas from Russia, the far east or even Africa. I have a problem with that.

Therefore, I want to ensure that although gas will be an important part of the mix, it will not have any kind of sequestration on it; it will be gas as we know it today. We have other ways of going down the road. I believe that coal has to be given priority. I would not have a problem with gas being in the Bill, but then again, I would not argue that it is a necessity for it to be there, either. I do not believe that gas is not there.

Hon. Members want gas to be looked at and they want this to be done, but I disagree with what is being said because as soon as that is written into the Bill, that is what the interpretation will be.

Michael Weir (Scottish National Party, Angus)

Will the hon. Gentleman give way?

Charles Hendryrose—

John Robertson (Labour, Glasgow North West)

I have given way to the hon. Members for Angus and for Bournemouth, East, so there is only one Member I have not given way to and I give way to him now.

Charles Hendry (Conservative, Wealden)

I am very grateful. I have always found that the hon. Gentleman and I broadly agree on many of these energy issues, and I have a great deal of time for him, but I have just listened to him for five minutes explaining why the measure should not be in the Bill, then he said that he would have no problem with it being in the Bill. No one is suggesting that we add the words “gas-fired” to the Bill. The suggestion is that we simply remove the words “coal-fired”.

As the Bill stands, it would be against the law for £1 of the levy to be spent on developing gas CCS; it could go only on coal-fired generation. Therefore, the proposal, which seems eminently sensible, is not to require this to be done on gas, which is what the hon. Gentleman appears to be suggesting, but simply to make that possible so that it could be done without the law being broken.

John Robertson (Labour, Glasgow North West)

Another short intervention. I understand what the hon. Gentleman is saying, but he also agreed with me earlier, when I intervened on him, that coal was a priority. Therefore, if coal is the priority, the Government are introducing what I think is a fairly sensible Bill and ensuring that that issue is identified and looked at. That will not stop this being done again in years to come, but I just do not think that gas needs to be written into the Bill just for the sake of doing it. That has nothing to do with whose idea it was, because most of our ideas come from outside industry anyway. I do not see why that has to be a problem.

I will leave it to the Minister to explain why the Bill has been drawn up in such a way. I am sure that it will be clear to everybody and that the hon. Gentleman will withdraw his amendment.

Joan Ruddock (Labour, Lewisham, Deptford)

Obviously, this is quite a passionate debate, with people raising many reasons why gas should be included and, as the hon. Member for Angus says, quoting Professor Gibbins at some length.

I have some difficulty here, because it seems to me that there is nothing in the evidence with which any of us would disagree. We urgently need to consider and plan for the decarbonisation of our whole electricity supply. We also need to acknowledge a large part of the supply as gas-fired. However, Professor Gibbins said clearly that we are talking about into the 2020s and looking to 2030, when gas plants will still be in use. Nobody is suggesting that we will not expect to want to have CCS on gas at some point in the future; this is all about where the priority lies.

There is no question but that we would wish to understand CCS on gas. It is clear to me that the potential is there to learn from other projects, notwithstanding that all circumstances, as the hon. Gentleman said, quoting Gibbins, are not identical. However, we expect to be able to learn and that some aspects of CCS and coal in this country would in themselves be applicable to gas, so there is no difference between us in that respect.

The hon. Gentleman seemed to think that there was a contradiction in the national planning strategy on energy. He quoted the provisions on carbon capture readiness, but surely that only reinforces the fact that the Government accept that there will be a need for CCS on gas in the future. That is the sole reason why we have said that carbon capture readiness is a necessary part of consenting to new plant.

Michael Weir (Scottish National Party, Angus)

In a sense, I am not disagreeing with the hon. Lady. My point is that, as the national plan is written, no one will get permission for a gas-fired station because the CCS is not ready. How can we demonstrate that carbon capture is ready if the technology does not exist for gas? That is the point.

Joan Ruddock (Labour, Lewisham, Deptford)

The fact is that enough is known already about the CCS potential for gas for companies to be able to understand what CCS readiness is. That was indeed spelled out in what the hon. Gentleman read into the record, so it is quite clear that carbon capture readiness is understood, is provided for and can be undertaken, and that planning inspectors will be in a position to make decisions based on what is set out in those plans. There is no contradiction. The issue must surely be whether there is to be experimentation elsewhere. We know that there is; both the hon. Gentleman and I have cited examples of that.

The hon. Member for Wealden referred yet again to the BP plant. It is completely incorrect to suggest that the BP plant was lost due to lack of Government support. Government support for the plant was never directly offered or sought; it was a question of whether it entered itself into a competition, and it decided not to participate when all the details became known. It made commercial decisions that had nothing to do with lack of direct Government support to that plant. There was never a question that the Government would simply subsidise one company in one location dealing with one specific technology.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

With the greatest respect to the Minister, she will know that at the BP Miller field there was encouragement of a single project, together with Scottish Power, at that time. That was the arrangement. It was only when the final decision about funding the project came in that the Government—very disingenuously—invented a competition. That was what happened, rather than the other way round. BP was certainly in a position to go ahead with that project as a demonstrator.

Joan Ruddock (Labour, Lewisham, Deptford)

Neither the hon. Gentleman nor I will know of private conversations that may have taken place—encouragements or otherwise—but I am absolutely clear that there could never have been an intention specifically to subsidise an individual plant. That is why we have the competition.

The other thing I want to say, before I get to the meat of the debate on clause 6, is that everyone has spoken as though CCS were already a proven technology and we could have real certainty about applying CCS to gas through demonstration projects. The whole purpose of demonstration projects is to see whether it is possible to bring CCS to scale and to do it commercially.

At the moment, we are in a very different place from where we could conceivably be by 2020, not least through our own demonstrators in this country. As everyone has acknowledged, they are also taking place in many other countries, not least with EU funding of 12 projects within Europe, where I would suggest things are pretty comparable in terms of their application.

Michael Weir (Scottish National Party, Angus)

I think the Minister is missing the point. What do clauses 1 and 6 mean? The whole of the four or five projects will be turned on coal. There is no window for gas, despite its importance to electricity generation in this country. It seems absurd to close off that avenue altogether, without even leaving the possibility of it being helped along.

Joan Ruddock (Labour, Lewisham, Deptford)

Let me address those points in a more comprehensive way, as opposed to answering questions. Clause 6 sets out the definitions for a number of terms used in this part of the Bill. In particular, the clause defines the term “commercial coal-fired electricity generation” which is used throughout part 1. The effect of that definition is that financial assistance, which may be provided by the Secretary of State to CCS demonstration projects and for the future retrofit of CCS to any unabated capacity at such projects, is limited to commercial-scale electricity power stations that are fuelled using coal or coal and biomass. Amendments 16 to 20 would remove all references to coal-fired power stations from the Bill. As hon. Members have indicated, they would therefore broaden the scope of the provision to allow CCS demonstration projects to use any type of fuel, including gas.

As I set out at our evidence session last week, there are strong arguments for prioritising the development and demonstration of CCS technologies for coal power stations. I need to reiterate them as they have been entirely lost from the discussion, except in the case of the excellent contribution from my hon. Friend the Member for Glasgow, North-West, who outlined the many sound reasons why we should pursue coal rather than other fuels.

Coal is the most carbon-intensive fuel and its use is set nearly to double globally by 2030. CCS for coal is the most technically challenging because coal is such a dirty fuel, but CCS for coal is cheaper than for gas. Therefore, for economic reasons, it should be deployed sooner. New clean coal in the UK will provide diversity and flexibility in the energy mix and so help to ensure security of supply.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I apologise to you, Mr. Bayley, and to the Minister for missing part of the sitting. I was speaking at a college reception elsewhere. It was already a commitment when my hon. Friend the Member for North Southwark and Bermondsey ganged me into coming on the Committee.

Emily Thornberry (Labour, Islington South and Finsbury)

Press-ganged?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

He did not press me because I do not allow him to touch me at all, in any shape or form.

There is an important point of principle. There is an assumption, and the hon. Member for Glasgow, North-West made this point, that the Bill will lead to the development of clean coal technologies in the UK and that carbon sequestration in the form proposed—and I agree with all the arguments that the Minister has just made—will lead to the resurgence of the UK coal industry.

We have 200 years’ worth of coal beneath our feet, particularly in an area such as mine in Yorkshire, with some of the largest coal seams going right up to the north-east. The reality is that when the previous Government privatised the electricity industry, the industry became free to buy coal from wherever it liked, as it does now under a Labour Government. It does not buy it in the UK.

Hugh Bayley (Labour, City of York)

Order. Interventions are supposed to be short. This is not a speech, but an intervention on the Minister’s speech.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Oh, is it? I am sorry. I hope that the Committee will agree that it is an important point. I take your guidance because you are a very wise Chairman, Mr. Bayley. I ask the Minister, where in the Bill is there any comfort for the UK coal industry? How can it assume that there will be a reason for the electricity companies to use British coal when carbon sequestration is in place?

Joan Ruddock (Labour, Lewisham, Deptford)

I accept the hon. Gentleman’s apology for not being here. If he had been here throughout all the sittings, he would have heard me say why I think that there is encouragement to those who might invest in coal supplies in this country. If there was no CCS project funding or framework, there would be no investment in new coal or new coal plants. If we give assurances that there is support and that new coal-fired plant will be built in this country, that will encourage those who mine coal in whatever way in Britain, as they will have a ready market for their product. That is the connection and there is nothing more in a privatised market that anyone would expect a Government to do with legislation.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

It is too dear. It is too expensive.

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Gentleman makes comments that are not relevant to how a Government legislate. I think that I have explained the connections. We are in a free market when it comes to producing the raw fuel.

I was speaking about why coal should be prioritised and I would add the important role that coal-powered stations perform, which is to respond to changing supply and demand—for example, as back-up to intermittent renewables such as wind, or when there are unexpected problems with other power stations. Coal generation can also provide a useful back-up when gas needs to be prioritised for heating for domestic consumers in very cold weather, such as we have at the present time. For us, therefore, coal has many important roles and that is why we seek to include it in our energy mix.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Nobody doubts the primacy of coal as a current UK base energy source—that primacy is obvious. What I do not understand is why the Minister, through her resistance to these amendments, is obliging Parliament to legislate again if it should wish to come back to this issue to broaden CCS to other energy sources. That seems to be nonsense.

We are trying to reduce legislation, so it is surely better to give an option. These amendments would not oblige anybody to do anything; they give an option. In a minute, we will debate fuel poverty schemes, where the Government have a “may” provision and not a “must” provision. Why cannot we have a “may” provision here, just as we have in the rest of the Bill?

Joan Ruddock (Labour, Lewisham, Deptford)

I shall deal with the hon. Gentleman’s points in due course. I just want to continue my train of thought about why coal is so important. We have a demonstration programme as part of our wider framework for the development of clean coal, which we published last November. It includes the requirement for any new coal power station to demonstrate commercially the full CCS chain.

If companies are to invest in the new coal power stations over the next decade, we all agree that they will need to have financial assistance to help with the requirements of this regulatory framework. Widening the scope of the demonstration programme to include gas could jeopardise that investment in new coal power stations, as there would be no certainty that all four projects to which the Government are committed would be in coal power stations. I say that advisedly, because the amendments that seek to remove the reference to coal would mean that there could be CCS support for power stations that are fuelled in any way whatever.

We are determined that we will have coal in the mix. Therefore it is obvious that we must have a certain critical number of coal-fired power stations; it is not acceptable to us that there should be a completely open provision in the Bill.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

We are all keen that we should have CCS in coal-fired power stations. My party is keen on that—as much, if not more, than other parties here today. However, the Minister could deal with her concern by coming back with a counter-proposal that at least three of the developments must be in relation to coal. We are seeking to open the opportunity for CCS in relation to other options, not to drive CCS completely in the other direction. I have given a counter-proposal that the Minister could make. Alternatively, we could make it and she might be able to respond more positively.

Joan Ruddock (Labour, Lewisham, Deptford)

The answer to that suggestion is that I clearly would not seek to do that. The hon. Gentleman has just illustrated what is wrong with these amendments—indeed, what would be wrong, given the priorities that I have clearly outlined, with any other type of amendment that created a situation in which we could get fewer than four coal-fired stations receiving financial support under the levy system.

Of course, hon. Members, including those on the Conservative Front Bench, might like to propose doubling the levy and the number of the projects. However, the fact is that we think that it is a sustainable proposal to have four coal-fired power stations that can adopt CCS under the provision, given the amount of money that we think is reasonable to raise and consumers can reasonably bear. If we think that four is the right number, and that the sum of money is of the right order, it is essential that those four power stations are coal-fired ones, because coal is the priority for the reasons that I have indicated. It is also a critical priority to keep a significant amount of coal in the mix. Even with four CCS coal-fired stations, which would be capable of running into the ’20s and beyond, we would still have a much reduced coal capacity compared with what we have today.

Tobias Ellwood (Conservative, Bournemouth East)

The Minister continues to make a powerful argument as to why we should have carbon capture and storage for coal, but she is not making the case as to why we should not have it for gas. She is repeating the same message that we received a couple of days ago.

I think that the Minister wants to protect the coal industry. If we were cynical, we would see that we are importing more coal than we are digging up in the UK. As that continues, we are supporting the import of even more coal. By denying the opportunity to include gas, the Minister is protecting the coal industry, with the effect of denying the opportunity for gas to catch up with carbon capture and storage. That is what is happening, and that is underlying the message that we are getting.

Joan Ruddock (Labour, Lewisham, Deptford)

I have to tell the hon. Gentleman that nothing is further from the truth. If he is against imports, he must be against gas, because half the gas that we use in this country is imported.

What I have said clearly is that for energy security needs, global needs and a whole range of reasons, we want to see coal in our energy mix, and we want to have it with CCS fitted if possible. If we are to have four projects and raise the money that we have proposed, we need to ensure that those projects are coal. Therefore, it is not enough to suggest that it would be okay to have three. We believe that in the future we will need that amount of coal-fired generation with CCS. The programme will do exactly that. There is no way that we will seek to have fewer projects to bring gas in.

May I say something about gas? There is no question of our accepting amendments that would diminish our commitment to coal. We seek not to protect any aspect of the energy industry—we have a free and privatised market—but to get the energy mix right. The issue is about the energy mix.

Tobias Ellwood (Conservative, Bournemouth East)

I do not understand how the Minister can say that we would diminish the efforts that we are placing on coal. At the end of the day, she and the office of carbon capture and storage will decide where the money will go, regardless of what bids are proposed. The question that I posed to her is the same as the one that I posed to the hon. Member for Glasgow, North-West. When does the Minister think that a Bill will come through that will allow the introduction of demonstration projects on carbon capture and storage for gas?

Joan Ruddock (Labour, Lewisham, Deptford)

I find myself in some difficulty, because I am becoming repetitive.

Tobias Ellwood (Conservative, Bournemouth East)

It is a simple question. When will a such a Bill come forward?

Hugh Bayley (Labour, City of York)

Order. The Minister is responding.

Joan Ruddock (Labour, Lewisham, Deptford)

Let me be absolutely clear: we want four coal projects. If we removed references to coal, it would open the field to projects that are not coal. That is the simple logic. I imagine that it could even be the subject of a legal challenge if the Government then said that any field could be included, but we had chosen only coal. The hon. Member for Bournemouth, East would then say that we were favouring the coal industry over every other industry. We are being honest, straightforward and saying exactly what we seek to achieve with the Bill. That is why I am resisting the amendments.

Judy Mallaber (Labour, Amber Valley)

Is there anything in law to prevent a demonstration project for gas from taking place if it did not require the levy? How much would it cost to have a fifth project that involved gas with a levy?

Joan Ruddock (Labour, Lewisham, Deptford)

Any company that sought to develop any project of any size could do so if it used its own resources. Gas-fired stations could therefore become pilots for CCS. However, the Bill will establish a levy, so, as my hon. Friend rightly asks, what would it mean to produce an additional amount of money to fund an additional station? We have indicated that it costs between more than £7 billion up to £9.5 billion to support four coal-powered stations, so it would be easy to work out what it would cost to support a fifth station if we thought that the sums of money were equivalent, but that is something that we cannot say. We believe, however, that gas would be more expensive than that, thus significantly increasing the levy and consumer bills.

Timing is another issue. I have given many reasons why coal should be a priority, but surely timing is an additional reason. The timing is very important, because coal is so polluting. Coal-fired stations will have to close down for a variety of reasons under other legislation. If we are to replace and retrofit coal, we have to do it in the coming decade. That is clearly the absolute priority. However, we can accommodate gas to a large degree and for a longer period within the emissions limits that we have set this country.

We are considering CCS for gas at a later stage. Once that is clear, it will be possible to have a debate about whether we need a levy system to support gas at some point in the future. Moreover, do we think that, by the 2020s, the carbon price and technology learning might be such that a levy would be commercially viable in its own right? None of those things is known today. There is no denial of the needs of gas, but they are in a different time frame, and we have time in which to make those decisions.

Alan Whitehead (Labour, Southampton, Test)

Does my hon. Friend agree that that is precisely the point made in Professor Jon Gibbins’s note to the Committee about the time scale for gas and the extent to which coal-fired stations would not be built as a result of the large plant directive? Does she also agree, in view of a recent study by Centrica, that the potential to place renewable gas into the gas supply system is considerable? It would further mitigate the carbon emissions of gas and therefore place it further back in relation to the priority of CCS.

Joan Ruddock (Labour, Lewisham, Deptford)

My hon. Friend, as always, makes cogent arguments, and I am grateful for his support.

Anne Main (Conservative, St Albans)

I am reading with interest the fact that the Bill mentions only four projects and that anything else seems to be envisaged in a potential new Bill. That is wasteful legislation. It would be so much easier if the Minister considered a similar phraseology to that about the administrator and put something like “may at some point” include other fuels. That would simply remove the need for another piece of legislation in future.

Joan Ruddock (Labour, Lewisham, Deptford)

The hon. Lady proposes something that is not before us. We are debating the amendments that remove all reference to coal. I hope that I have by now made my position clear on that matter.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I understand the Minister’s argument. Can I be clear, however, that there is also one other bit of mutual understanding? Is it the Minister’s wish that, as a result of her four demonstration projects, we will have the technology to ensure that all future coal-fired power stations, or continuing coal-fired power stations that carry on past 2020 or thereabouts, will use CCS? This is only a demonstration, so that the whole of the industry can use it. I hope that that is the common understanding. There will potentially be many more than four coal-fired power stations, but there will simply be four places where they trial and work up to final projection, so that everybody can then nick the technology and use it for the future. That is what she means, is it not?

Joan Ruddock (Labour, Lewisham, Deptford)

Yes. We need to be clear, however, that we are talking about support through a levy that is specific to demonstrations. We have included—this is critical—that if decisions were taken to this effect, the levy system could further provide for bringing the whole capacity of the demonstrator stations up to 100 per cent. of CCS.

Tobias Ellwood (Conservative, Bournemouth East)

So it is not just four—the levy keeps on being paid.

Joan Ruddock (Labour, Lewisham, Deptford)

No, no. It is the four.

Tobias Ellwood (Conservative, Bournemouth East)

Does it say that in the Bill?

Joan Ruddock (Labour, Lewisham, Deptford)

I am explaining that the Bill will create all the frameworks. It will create the possibility of having the levy and all that goes with it. We have said clearly that we believe that that is required for coal-fired, pre and post-combustion. In addition, when the demonstrator shows, as we hope that it will, that the different stations can function and that it will be possible to move to 100 per cent. coverage, the levy system could be used to support the retrofitting of the rest of the stations.

We have not got a provision in the Bill, or an intention that would come through regulations, to do other things with the levy. The levy is limited to what I have just described. As for other stations, learning and bringing retrofits would be a matter for the market at the time. We have a rolling review going forward to 2018, so we will be able to see what else may or may not be required to support CCS.

Several hon. Membersrose—

Joan Ruddock (Labour, Lewisham, Deptford)

One, two, three and four, and then I want to make progress and not give way any more.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I hope again that there is common agreement that the Minister would say that the Government’s strategy, which we would support, is that once the technology and the demonstration has been established as working, the next generation of coal-driven power stations would not seek or be given any Government subsidy or levy by collection, because the technology will already have proved successful. The idea is to prove that it can work and then leave the markets to pay the full price. That is what I assume the Minister is saying.

Joan Ruddock (Labour, Lewisham, Deptford)

I think that I may have said that this morning.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

It has been helpful for the Minister to make clear the Government’s position, but I take her back to a key point. She said two things this afternoon: first, she said that Government policy is to do with energy security, then she said it is to do with the energy mix. Energy security means that the source of the energy is controlled by the UK. That is why we have gone partly into nuclear—we can control that source, which involves small amounts of nuclear material. Coal brings me back to the point made by the hon. Member for Glasgow, North-West: unless we use UK indigenous coal, we do not have energy security in the sense that the Minister talked about nuclear energy. Would the Minister welcome an amendment, or perhaps the Government could table a proposal, stating that those four demonstrators—they are being paid for by a levy, which is on UK customers only—would have to use UK coal as part of that demonstration?

Joan Ruddock (Labour, Lewisham, Deptford)

My guess is that we would contravene some trade laws if we attempted to do that, so there would be no question of doing it. However, if we do not produce the levy and enable coal to be clean, there will be no future for the UK coal industry. That is the way that we—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That is a different issue.

Joan Ruddock (Labour, Lewisham, Deptford)

No, no. This is important, because it is about incentivising the industry and we incentivise it by making that change. The hon. Gentleman says that we have no energy security, but energy security is based on the fact that some of the coal is produced here. There is the potential for more to be produced here. In addition, achieving the mix means better security in terms of generation and protecting against failures in other plant.

John Robertson (Labour, Glasgow North West)

The problem with coal-fired power stations is the type of coal that has to be burnt. The dirtier coal is not suitable for our power stations at the moment and therein lies the problem. However, that should be looked at in the future, so that we use UK coal.

Will my hon. Friend the Minister tell me when the EU emissions directive comes in for coal-fired power stations? One problem that I am aware of is that 2015 was a deadline for some of the power stations to be closed down if they did not meet the criterion of being clean enough. Longannet is one of those power stations and is the biggest in the nearest trial area to me. Do we have a problem in that, even though we get those trials, we will have to start to shut down coal-fired power stations?

Joan Ruddock (Labour, Lewisham, Deptford)

That is indeed my understanding. From recollection, I said this morning that I thought five coal-fired power stations would have to close by 2015. Nobody has corrected me, unless this piece of inspiration is a correction. No, I am right. Five coal-powered stations will have to close by the end of 2015 as a result of the large combustion plant directive. I am afraid that that is the case, but it has always been what we expected to happen.

We are looking forward to make it possible for replacements to occur and for new coal to come on stream. Given that a third of the coal used for generation in coal-fired power stations is produced in the UK, we think it important to secure the future for that production. I think—again, I speak from memory—that about 6,000 people are employed in that industry.

The rest of the debate is in Hansard.