Coal-fired Power Stations

Debate between Alan Whitehead and Philip Boswell

Wednesday 27th April 2016 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I would like to congratulate the hon. Member for Cannock Chase (Amanda Milling) three times. First, I congratulate her on securing this important debate on the future of coal-fired power stations. Secondly, although I would not like it to be thought that I have an unhealthy interest in her website, I congratulate her on her hard work on the future of the Rugeley site—not just on whether it continues as a coal-fired power station, but on the other possible uses for the site, including conversion to a gas-fired power station.

Thirdly, I congratulate the hon. Lady on bringing to the debate an interesting category dilemma. I am responding as a member of the shadow energy and climate change team, and the distinguished Minister represents the Department for Communities and Local Government, so between us we may be able to provide a complete landscape of discussion in response to her concerns. I will concentrate particularly on the energy issues and the future not just of Rugeley but of coal-fired power stations across the UK.

As the hon. Member for Coatbridge and—

[Philip Boswell]

Chryston and Bellshill.

[Dr Whitehead]

I will get the entire title of the hon. Gentleman’s constituency right one day. He will have to forgive me for not getting the various parts entirely correct. As he said, coal-fired power stations in this country will not have a future unless there is a clear programme accompanying their development to capture 90% of their emissions through CCS.

It was with considerable regret that we saw the termination of the UK’s two potentially world-beating pilot projects for comprehensive CCS; among other things, they would have paved the way for a much more widespread implementation of CCS for new and existing power stations across the country. I do not think that the route to CCS in this country is dead, although I was sad that the Opposition’s call for a comprehensive new CCS strategy from the Government, which we made during the passage of the Energy Bill and which was supported by the Scottish National party, was not incorporated into the Bill. In the light of the termination of those projects, there is an urgent need to develop a viable new way forward for CCS, whether exclusively in this country or in collaboration with other countries, to keep alive the idea that it is possible to attach CCS to power stations in future.

--- Later in debate ---

[Dr Whitehead]

Indeed, Ms Ryan, I am about to conclude my remarks, having revealed my thoughts on the idea a gas-fired power station at Rugeley. However, before I do so, I want to spend a minute on the question whether that conversion is feasible under existing arrangements in the capacity market. At the moment, the market provides either underwriting for existing power stations to continue to supply, or the possibility of contracts for new power stations, but there does not appear to be a category within them to enable conversion to take place—certainly not in the 15-year period.

I encourage the hon. Member for Cannock Chase to talk to DECC about whether the capacity market might be amended to take account of such arrangements. A number of coal-fired power stations have been converted to gas recently in the United States, so it is technically feasible. It depends on the kind of power station. Nevertheless, it certainly makes sense—if we are to have new gas-fired power stations anyway, why not have a gas-fired power station where a coal-fired one was? We would not then have the problem of how long the gas-fired station would need to operate over the next period. If that can be done, it would be a positive addition to our fleet of power stations and might be a solution that could apply to other former coal-fired power stations.

[Philip Boswell]

Given that CCS technology is proven and that the hope for Government funding is not entirely lost, does the hon. Gentleman agree that Government investment in research and development and stable legislation are key to the industry confidence necessary to develop CCS in the UK?

[Dr Whitehead]

I agree. That is something for the future that applies to the whole power sector. We need a series of stable policy bases on which to proceed with future power provision.

Finally, given the well-known interest of the hon. Member for Selby and Ainsty (Nigel Adams) in biomass and his leadership of the all-party parliamentary group on biomass, he must be aware that Rugeley B was scheduled to be converted to biomass in 2012, but that the company that took over the power station decided to pull the idea. Perhaps a reopening of that interest might be appropriate, although he must also be aware of the question about contracts for difference and how they may or may not come to the aid of biomass in future, given the budgets available.

In conclusion, I encourage the hon. Member for Cannock Chase in her pursuit of alternative uses for the Rugeley B site. If it can be given new life in a different form, that would indeed be a good outcome for the power station.

Energy BILL [ Lords ] (Seventh sitting)

Debate between Alan Whitehead and Philip Boswell

Thursday 4th February 2016 Public Bill Committees

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

I will keep my remarks brief. The issue of storage is underdeveloped in terms of a solution, GB-wide and from a European energy design perspective. We should invest in research and development, and the SNP welcomes any clause that would encourage such investment.

New clause 14 will hopefully open up many more storage projects, traditional and unconventional, as has been well pointed out by the hon. Member for Southampton, Test. Adequate storage is a solution to the intermittent nature of several types of energy, including solar and wind, as he also said. He also touched on battery power, so I will skip that and move on to a few other examples, such as compressed air energy storage and pump storage, which is particularly poignant in Scotland, given that we have Cruachan and Coire Glas sitting ready to go, should everything be suitable, as well as the usual hydroelectric solutions.

The only thing about battery power is the need for more research and development, as the hon. Member for Southampton, Test pointed out. It is often described as a megawatt solution to a gigawatt problem, in terms of energy generation in the UK. Something like the new clause is needed to open up and encourage further investment.

In compressed air storage, air is compressed and stored when cheap energy is available, such as on a windy night, and then released at peak times when required. The difference between that and current facilities for battery power is scale. The nuances of local solutions and local control touched on by my hon. Friend the Member for Aberdeen South during the debate on new clause 6 are relevant. Suitable salt basins are available onshore in England, where a pilot scheme could be run for about £45 million, whereas in Scotland we would need much more investment for an offshore solution. We are minded to support the clause inasmuch as it would encourage, as we sincerely hope it will, the uptake of much more storage.

[Dr Whitehead]

I should perhaps emphasise that although the clause is headed “Electricity Storage”, it is about storage licences and therefore the particular technologies that the hon. Gentleman mentions, such as compressed air storage, would come entirely within this arrangement. So that no one is under any misunderstanding about that, it is intended to deal with all forms of storage, not just electrical battery storage.

[Philip Boswell]

I thank the hon. Gentleman for his intervention; it is most helpful and clarifies the position, should anyone be in any doubt. As such, we are minded to support this clause.

Energy BILL [ Lords ] (Third sitting)

Debate between Alan Whitehead and Philip Boswell

Thursday 28th January 2016 Public Bill Committees

[Dr Whitehead]

I want to pick the Minister’s brains, particularly on clauses 43, 45 and 46, which relate to sanctions, enforcement and financial penalty. As the Minister has already guided us, this is the area where the OGA gets heavy with people who have not resolved their disputes properly or not done what had been decided.

This part of the Bill lays out a number of ways in which that circumstance can be approached, including through sanctions on companies—although I am unclear how exactly those would be enforced—and enforcement notices. I assume that sanctions lead to enforcement in a linear process, but the connection is not completely clear.

I want to refer briefly to the financial penalty. I presume the process has been followed of worrying about what has gone wrong, a possible resolution, a sanction notice, failure to comply with that and an enforcement notice that is also not complied with. A financial penalty notice finally arrives to underpin that process. That is my understanding of how this part of the Bill works.

Then we have the amount of that financial penalty. Clause 46 states:

“The financial penalty payable under a financial penalty notice in respect of a failure to comply with a petroleum-related requirement…must not exceed £1 million.”

That appears to give a clear ceiling on the penalties. I presume the companies concerned in the exploitation of the North sea will read the clause closely and decide that is what could happen to them, were they to go through the whole process, and that is the financial penalty that might come their way. That is not a particularly high financial penalty, compared with some of the fines imposed by Ofgem, for example, relating to practices in the energy market; we have seen fines ranging from a few million to tens of millions related to the practices of energy companies.

At the end of this part, an interesting caveat is placed on the regime and the penalty limit of £1 million. The caveat is in clause 46(7), which states:

“The Secretary of State may by regulations amend subsection (1) to change the amount specified to an amount not exceeding £5 million.”

That appears to put into the Bill considerable uncertainty. Is the amount £5 million? Is it £1 million? Is it that if too many companies do too many bad things over the period, the Secretary of State will decide that the penalty is not high enough and will then, by regulations, introduce an additional penalty—the general tariff maximum? Or is it that the Secretary of State has a reserve power—there is a threat—over the period to ensure that companies toe the line on sanctions and enforcement notices?

To return to what I might do were I a company involved in the North sea and I looked at this provision, I am not sure how I would react. Would I say, “That’s okay, because the worst that can happen to me is a £1 million fine,” or would I say, “Hang on a minute. The Secretary of State might actually levy a £5 million fine”? Presumably, by the time the Secretary of State has levied the £5 million fine—because that requires the provision to be amended by regulations—I will have finished with my £1 million fine. A company or companies might be undertaking fairly flagrant abuses in the system that are advantageous to them to an extent well in excess of £1 million, but provided that they can take on board the £1 million fine, they can presumably get on with undertaking those abuses. I think that there are extreme powers in the Bill to force disinvestment by companies that are completely in breach of conditions.

The Secretary of State’s power to up the fine limit would be applied only once the horse and cart were well down the road and the stable door was wide open. The Secretary of State would then, under the processes of the House, have to work out how to undertake regulations to put the fine limit up and make the regime different. It might be wiser simply to place in the Bill an upper limit that may be varied downwards, rather than having in the Bill a limit that appears to be not the limit, which would be another limit entirely. Is the Minister amenable to looking again at the provision to see whether a better formulation could be brought about in relation to fines? Alternatively, is there a deeper explanation, which I have not understood, as to why the relationship between £1 million fines and £5 million fines is in the Bill in the way that we see it?

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

I was going to speak on the same subject— clause 46 and the amount and nature of the financial penalty in relation to the numbers that we are dealing with in terms of daily production—but I will not labour the point, because the issue has been more than adequately covered by the hon. Member for Southampton, Test.

Energy BILL [ Lords ] (First sitting)

Debate between Alan Whitehead and Philip Boswell

Tuesday 26th January 2016 Public Bill Committees

[Philip Boswell]

Amendment 9 is essential both for the future of carbon capture and storage and to enable the more marginal fields to be harvested by smaller operators, which the Scottish National party sees as increasingly vital for the future of the industry. The hon. Member for Southampton, Test and the hon. Member for Norwich South spoke of previous short-termism in the industry and the need for a longer term vision, as pointed out in the Wood report. We completely agree with that and see that there is a requirement for a more holistic view with respect to management of oil and gas collection and transport infrastructure. We therefore support the amendment.

[Dr Whitehead]

I thank the hon. Member for Coatbridge, Chryston and Bellshill for clarifying the SNP’s position on amendment 9. His support underlines why this is necessary for the longer term stewardship of the North sea. We are looking a little higher than the immediate issues that face the North sea, important though those are, and trying to ensure that, whatever may come its way and whatever its mix of jobs, production and facilities, it has a fully viable future. As we mentioned on Second Reading, although there are a lot of known knowns, unknown knowns, unknown unknowns and so on about the future of the North sea, what we do know is precisely the point that the hon. Gentleman made a moment ago—namely, it will be a future of smaller fields and, through collaboration and careful planning, of maximising best use of infrastructure for those fields to maintain their security and perhaps to start to develop different uses for the North sea, which in the very long term will provide substantial security and jobs and a vital national function for the UK.

The amendments are not about trying to cut off particular routes for the OGA—or, indeed, over-prescribe what the OGA should have regard to. I was disappointed that the Minister sought to suggest that the amendments should not be supported because they would require the OGA to do things beyond its remit and for which it would not have resources. The OGA would not be required by anything in the amendments to move beyond its overall resources or function, but they frame what the OGA needs to look at generally in regard to its business of stewardship. That of course means that the OGA has to look at its overall business within the context of its overall resources, and there will be things that the OGA will not be able to do, or be able to do only in conjunction with other bodies. Indeed, as the Minister pointed out, clause 10 gives the Government the power to undertake direction where necessary, if the Government consider there are particular circumstances wherein the OGA should do more or enter into areas of activity that it has not entered previously. That power is already there, and there are powers in the Bill for the Government to fund those additional activities as necessary.

The amendments are not about the daily management of the OGA and how it can go about its business. As the Minister rightly set out, there are already provisions in the Bill for allowing that management to be undertaken in conjunction with Government direction and OGA function. However, the fact that that is separate from the clause that precedes it points strongly to the idea that having a framework within which the OGA works is the best way to start the process of how the OGA functions on a daily basis for the future. Essentially, that is all these amendments seek to do—point the OGA in particular directions and inform its thought process and general decisions with regard to particular activities. They do not require the OGA to do anything particular in its daily activity, nor do they require it to acquire a whole series of new skills and arrangements as it goes about its task. They simply suggest that a framework should be put in place, after which the Government, particularly under clause 10, can look at whether the OGA in its daily operations is doing what they thought it should do in the first place.