Energy Bill

The quotes that we have seen and the conversations that we have had with the companies have all been based around the provisions of this Bill, what they mean for investment in this country now and how those investment decisions would be undermined by the introduction of an EPS now, as proposed in the new clause that the hon. Gentleman supports. The hon. Member for Cheltenham (Martin Horwood) said that there was a need for clear signals to be given. I do not believe that there could be a clearer signal than the framework that we offer in this Bill, the levy that it contains and the certainty that companies can have that they can invest at a time when they are being asked to do so in technology that in its complete form—from capture to transportation to storage—has not yet been proven. He cited a range of projects that appear in an IEA report. I have to tell him that I have now had the opportunity to check all those projects and I have found that some of them are not operational, some will not necessarily be taken forward and none is on a commercial scale. I hope that he will therefore understand that what is proposed by our framework is necessary, because those projects are not on a commercial scale, and the support that we rightly offer through this Bill is what industry needs. The hon. Gentleman asked about EU law and suggested that there was an amendment to a directive that could be a threat to any future EPS. We have been in discussions on the matter and we remain convinced that the proposed amendment does not threaten any attempt by a sovereign state to introduce an EPS at any stage in the future. I am glad to see my hon. Friend the Member for Nottingham, South (Alan Simpson) in his place. I think that he compared me to a worm today, which I am very surprised at—he compared me to an invertebrate, and the best known invertebrate is a worm. He spoke at some length about how he thinks that an EPS can incentivise, and made comparisons with the German feed-in tariffs and catalytic converters in cars. My hon. Friend the Member for Morley and Rothwell (Colin Challen) intervened and made the following point, but it needs to be emphasised. There is a fundamental difference between creating incentives to bring on and to produce more use of existing technologies, and creating the incentives required to enable people to take on a huge risk where the technology is not yet entirely proven. We reject absolutely the comparisons made by my hon. Friend the Member for Nottingham, South, which do not support a case for imposing an EPS such as that which he suggests at this stage. When EU law sets standards, it does so on the basis of the best available technology—that means not just the technology that is available for lab-scale prototypes but that which is economically and technically feasible. That is the judgment that we must make when we are considering the investment programme that we propose and how an EPS would undermine it. My hon. Friend the Member for Nottingham, South also asked, as did my right hon. Friend the Member for Edinburgh, East (Dr. Strang), why the Government would throw such enormous sums of money at the private sector without setting any conditions. First, let me remind the House that conditions already exist in our climate change levy and the EU emissions trading scheme. We are already in a carbon-constrained economy where all fossil fuels are subject to some constraint, and that is recognised and codified in the carbon budgets that we have set through to 2022. They, of course, are statutory. Obviously, conditions will be set on the projects through the incentive. There will be performance standards, which will need to include the meeting of an agreed schedule for the storage of CO2 and the amount of CO2 that is to be stored. There will need to be monitoring of the CCS projects, as well as the collection, collation and reporting of information to an agreed standard. The information will then have to be shared. We will have to ensure that the CCS projects fully meet any relevant safety and other standards. So, there will be standards. In addition, the payment made to companies will not just be given to companies willy-nilly. It will be awarded to companies based on the amount of CO2 that is saved. As for the right hon. Member for Wokingham (Mr. Redwood), whom I see nodding—perhaps he is glad to have had that information—he asked for more information. He asked about the overall investment and I repeat what I said earlier: the estimated cost of the investment is £9.5 billion. He spoke well and in a way with which we would all agree about energy security. It is fundamental to what we are doing and the Bill is intended to assist with energy security. He said that the Government need to be clear about the missing bits, and we think that we have done that by saying that we need new nuclear projects, by making massive renewables incentives available to industry and by saying categorically and specifically in the Bill that we need four new coal-fired power stations, which we will enable to come on stream by making the CCS levy available. He can find further details about finance in the annexe to the low carbon transition plan, but that will be revised soon so he is welcome to write to me if he wants further detail, which I may or may not be able to give him. Where I am able to, I will do so. I very much appreciated the speech of the hon. Member for Northampton, South (Mr. Binley), and I think that we all appreciated his enthusiasm for carbon capture and storage. He was at the meeting of the all-party group on coalfield communities that I addressed yesterday. It is important that people across the House have a commitment to coal and to the future in the way that he expressed. I cannot give him the satisfaction of agreeing to move from a three-year reporting period to a one-year reporting period, but I will say that, as he well knows, it is up to all Members of the House at Question Time, in Opposition day debates and on other occasions to obtain more frequent responses from Ministers if that seems appropriate. He asked specifically about the nature of reports. I can give him the assurance that all matters such as clusters, the concept of pipeline networks and storage capacity—indeed, all the potential uses that he could think of—can be covered by reports, and we anticipate that they will be. The hon. Member for Angus (Mr. Weir) asked about a subsection of new clause 8 and the fact that we have said clearly that we will be in a position, through the reporting regime, to consider whether we need to revise policies. He has interpreted that to mean that we will revise matters in 2020. On the contrary, we have three-year stages, so there will always be the potential to revise policy as we go along. The difference between our position and that of putting an EPS in place very quickly is that we will have knowledge of how CCS is going and will therefore be able to make better judgments not only about whether an EPS might be required at any stage, but on whether any other measures are required. Companies clearly understand that we are putting our confidence in CCS and we are making it possible, but sensibly and rationally. We will revise matters on the basis of how well things are going and what is achieved. My hon. Friend the Member for Blaydon rightly said that I did not respond immediately to his question about the likely effect on customers' bills. I responded to that point later, but he might not have heard that response. We think that the levy that we propose would have an effect in the region of 2 to 3 per cent. on a customer's annual bill. Finally, I thank my hon. Friends the Members for Morley and Rothwell, for Sherwood (Paddy Tipping) and for Southampton, Test (Dr. Whitehead), all of whom I believe are environmental vertebrates, certainly in my experience, in their enthusiasm—[Interruption.] There has been an in-joke all afternoon about the vertebrates and the invertebrates. My hon. Friends have demolished the arguments in favour of introducing an EPS under any of the new clauses, and have demonstrated the perverse outcomes that could result if we were to vote in favour of any of them. I commend new clause 8 to the House. Question put and agreed to. New clause 8 accordingly read a Second time, and added to the Bill.