My Lords, we return to discuss the emissions performance standard and whether it should be possible to apply it to existing coal plant in wider circumstances than the Bill currently envisages. The Government set out in earlier debates, both in this House and in the other place, why we believe Amendment 105 is unnecessary. It has become clear over the course of the debates that there is an almost unanimous consensus on the need substantially to decarbonise our electricity generation by 2030. There is a similar consensus that there will be little or no role for unabated coal generation in that future.
In this Bill, the Government have brought forward a suite of measures that they believe will deliver the outcomes that we all wish to see. The Bill will do so without risk to our security of supply and at the lowest possible cost to the consumer. The Government believe that they already have the right balance of measures to deliver a secure, low-carbon electricity system at the lowest cost.
Amendment 105, proposed by my noble friend Lord Teverson, would allow application of the emissions performance standard to any coal-fired power station that fits the pollution clean-up equipment needed to meet the requirements of the industrial emissions directive. To date, only one station, Ratcliffe-on-Soar, is fitting the equipment needed to comply with the directive and there is no evidence that a large number of others are seeking to do the same. However, this amendment could result in all but one of the 12 coal-fired power stations expected to be operational after 2015 being subject to limited hours or forced closure under the directive. There is a risk that this, in turn, could lead to a scenario where more stations close earlier than might otherwise be the case. Were this to happen, it would require more gas generation to be built earlier than we currently project and, crucially, result in increased cost to consumers.
As my right honourable friend the Minister set out in the other place, we already face a significant investment challenge that will require an estimated 16 gigawatts of new gas plant to be built over the decade from 2015 to 2024 and around 45 gigawatts in total of all forms of generating capacity in this period. My department has therefore looked at a scenario where all our coal-fired power stations close by 2025, which is one possible risk of this amendment. The results of this analysis show that, as a result, in the 2020s average household electricity bills would be around 3% to 4% higher, average non-domestic bills would be around 4% to 6% higher and average energy-intensive industry bills would be around 5% to 7% higher.
The Government are taking a balanced and precautionary approach that seeks to protect consumers and ensure our security of supply. Our emissions performance standard is ambitious—the first in Europe—but it is right that ambition should be balanced with measures for a sensible transition. Ultimately we must ensure that we transition to a low-carbon economy in a way that provides certainty for investors, secure energy and is deliverable at the lowest possible cost to consumers.
Amendment 105B proposed by the Motion of the noble Lord, Lord Oxburgh, would bring all existing fossil fuel plants within the EPS regime from 2025, thereby requiring them to operate within the annual emissions limit set by the EPS. In common with fossil fuel plants that are consented after the EPS comes into force and to which it will apply, the power to suspend the EPS contained under Clause 48 could be used to allow those existing plants to operate over and above their limit should it be necessary to avert a threat to security of supply. I am grateful for the spirit in which the noble Lord proposes this amendment but, ultimately, what is at stake with both these amendments is an assessment of risk. I ask noble Lords to consider carefully whether they can be confident that the amendments will not give rise to risks that, were they to materialise, would be difficult and costly to address. The Government do not have that confidence. The question that noble Lords need to ask themselves is: do they have the confidence to take that risk?
It is through the measures in the Bill that we will reform the UK electricity market and attract the capital investment needed to decarbonise our electricity sector at the lowest cost to the consumer. The Government have listened carefully during the passage of the Bill through this House and the other place and have accepted measures that have improved it greatly, but the amendments would add an unacceptable risk. This House insisting on an amendment today will delay the Bill and will serve only to undermine investor confidence. I therefore urge noble Lords to consider both the direct and the wider implications of insisting on their amendments, given those impacts, and that a significant majority opposed this amendment in the elected Chamber. The Government do not believe that the amendments would provide greater certainty without, at the same time, creating risks to our security of supply and of increased costs to the consumer. On the contrary, causing delay to this vital legislation will only create uncertainty and risk delaying investment in our energy sector when it is needed most. I beg to move.
3.45 pm
Motion A1