Edward Miliband
Main Page: Edward Miliband (Labour - Doncaster North)
Dr Whitehead
The right hon. Gentleman makes an important point. Indeed, a carbon capture strategy that sets out a longer-term route for our carbon capture and storage would play an important part in ensuring that investment for CCS was available. He also makes the point that the cancellation of those pilot projects has cast quite a pall over the future investability of carbon capture and storage projects, despite the fact that many such projects are now getting under way across the world.
It is important to reflect on how we will import the relevant technology under a new CCS strategy and how we might keep as much as possible of the rest of the supply chain and other CCS arrangements in the UK, particularly the substantial developments and intellectual property gained from the White Rose and Peterhead projects, which must be retained in the UK for use in future CCS developments. All of that should be part of a strategy, but we simply do not have one at the moment. Having a strategy in place would enable us at least to recover substantially from the immense setback caused by the cancellation of those pilot projects. The new clause calls for such a strategy to be articulated at an early stage and for us to be clear about exactly how and why we will keep CCS on track for the future.
We have heard about targets today, but new clause 8 does not set a new target. It relates to the undertakings in part 1 of the Energy Act 2013 relating to setting a target for the decarbonisation of the energy sector by 2030. Part 1 makes it clear that the Secretary of State has a duty to ensure that the carbon intensity of electricity generation in the United Kingdom is no greater than the maximum permitted level of the decarbonisation target range. There is a clear undertaking in the Act to set a decarbonisation target range and a requirement for the Secretary of State to take related actions.
As I have mentioned, that target already exists. It has done so since the Energy Act 2013 was passed. The outstanding issue at the time was not whether there should be a target but what the target range should be. Under the legislation, it is up to Ministers to clear up that matter through secondary legislation. It is not a particularly small matter: it is in the gift of Ministers to decide whether the target for decarbonisation is strong or not. During the passage of that legislation, it became clear that Members across the Committee envisaged the target being strong and in line with the aim that carbon reductions should make a proper contribution.
Unfortunately, during the passage of this Bill in another place, we heard about a letter to the Opposition from the Minister in the other place. In Committee, I quoted the Minister stating in that letter that
“a power was taken within the Energy Act 2013 which gives the Secretary of State the ability to set a ‘decarbonisation target range’ for the electricity sector, for a year ‘not before’ 2030. This allows a target to be set on the same date or after setting the Fifth Carbon Budget which must be set before end of June 2016 (measured in emissions intensity in grams of CO2 per kWh)…it is the intention of this Government not to exercise this power. This position is consistent with our manifesto pledge not to support additional distorting and expensive power sector targets.”––[Official Report, Energy Public Bill Committee, 4 February 2016; c. 206.]
Clause 8 does not propose an additional distorting target. It is a target that was included in the Energy Act 2013, and it is incumbent on the Government to take action on the decarbonisation target range through secondary legislation. It is extremely disappointing that the Minister in the other place indicated that the Government were not going to exercise this power. The new clause would require the Secretary of State to set a decarbonisation target and discharge section 1 of the Energy Act 2013. I am sure that, in the light of our discussions this afternoon, Members would agree that it is extremely important that such targets should be placed as waystations on our way to 2050. That is what the new clause seeks to achieve.
New clause 9 addresses an aspect of that decarbonised structure for energy in looking at the perverse results of the first two capacity auctions in not procuring any long-term new large generating plant; instead, almost the only long-term outcome was the procurement of diesel sets as generators. More than 1 GW of generators was procured, and they are more polluting than coal, which the Secretary of State has pledged to take off the system by 2025. The new clause adds to the 2013 Act’s requirements relating to fossil fuel-generating plant that is granted a 15-year capacity contract. That plant must adhere to certain conditions if the contract is to be granted. One of those conditions is the emissions performance standard. Section 57 of the Act contains a target or formula that, under subsequent secondary legislation, has led to a performance standard of 450 grams per kWh being established.
The new clause clearly does not seek to capture gas, because new plant for gas comes in at about 370 grams per kWh and is below the emissions performance standard. It refers to diesel coming into the provision of electricity, particularly in the context of what has happened in the two previous capacity auctions. Those diesel engines escaped the provisions of the 2013 Act because they were individually below the size at which plants were caught by the legislation. However, in terms of their individual emissions, they are among the dirtiest of the energy generation devices.
Diesel is exempt from present EPS levels because of the individual size of the reciprocating sets, and it has therefore cumulatively obtained a substantial proportion of long-term capacity payments coming into the system. Diesel sets have been able to get into the capacity auctions not because they are particularly cheap to run but because until recently they were already receiving a substantial underwriting from the Treasury through the enterprise investment scheme payments for the establishment of such plants. It appears that the payments were originally introduced to encourage the plants to be established for standby purposes, but they have of course been used for other purposes in the capacity auction. Although that route has been changed in the autumn statement, the most polluting generating plants have managed to get two lots of subsidies for generating and have got in through the capacity auction process as well. That is not only bad climate policy but bad public policy in general.
The question of diesel sets was discussed in Committee, and in a recent ministerial statement on changes to the capacity auctions, the Government undertook to look again at the matter. They suggested that this might happen through proposals to change the air quality regulations under the large plants directive, which might include diesel sets. However, they said that those changes might not occur until 2019 at the earliest, which would be too late for the next series of capacity auctions. The new clause seeks the most straightforward route to ensuring that diesel is not the perverse beneficiary of auctions as of now.
New clause 10 looks further forward, to the fifth carbon budget, but perhaps not quite so much further forward, in that we will have to decide on the fifth carbon budget by the summer. The new clause seeks to strengthen the Government’s intention to use their powers to ensure that we keep on track by outlawing the use of private trading sector credits at and after the fifth carbon budget. The hon. Member for Warrington South (David Mowat) made some valuable points about that.
Hon. Members will recall that when the Bill arrived in the House from another place, clause 80 sought to simplify the accounting of the UK’s carbon budgets under the Climate Change Act 2008. That clause was removed during the passage of the Bill in Committee. This new clause seeks a slightly different route to the goal of more effective carbon accounting in the fifth carbon budget and beyond. It seeks to make the Government directly accountable for emissions in the sectors covered by the EU emission trading system when determining whether the UK is staying within its national carbon budgets. The EU ETS covers emissions in the electricity sector and heavy industry, and the carbon accounting regulations currently allow the Government to ignore emissions from those sectors when determining whether the carbon budgets have been met. For that reason, the UK’s carbon budgets, as currently designed, fail to provide a framework that offers investor confidence in the UK power sector. In particular, it provides no assurance that the Government will put in place the necessary measures to ensure that the power sector is largely decarbonised by 2030 despite the fact that the Committee on Climate Change has repeatedly indicated that the power sector must reduce emissions to below 100 grams per kWh by 2030 in order to maintain a cost-effective trajectory to our 2050 climate target.
If the accounting rules are changed, the Committee on Climate Change has indicated that it will provide new advice on the appropriate level for the fifth carbon budget, and the committee will for the first time be able to recommend a budget that reflects a cost-effective pathway for UK emissions across the economy. The new clause differs from the original clause 80 in a key respect: while clause 80 prevents any carbon units in the EU ETS from affecting the UK carbon account, the new clause specifically prevents the carbon trading behaviour of private firms from affecting the national accounts, which is what allows the Government to ignore emissions from the ETS sectors. Under the new clause, the Government would retain the option of purchasing and cancelling ETS carbon allowances to offset UK emissions at state level, an environmentally preferable form of carbon-offsetting compared with the many types of international offset credits available to the Government. If exercised, the offsetting option would also strengthen the EU ETS.
Finally, amendment 47 reminds us of the first part of the Bill and the wide consensus for change regarding North sea oil. It seeks to give the Oil and Gas Authority new powers and oversight to ensure that decommissioning is used to best advantage in the North sea. Decommissioning should not operate in the short-term interests of those involved in it but in the longer-term interests of the co-operative use of infrastructure, which hon. Members have touched on, and for the benefit of not only the production of future, more marginal fields over the next period, but the future possible use of the North sea as one of the world’s finest repositories when carbon capture and storage gets under way. The amendment would add an important tool to the Oil and Gas Authority’s arsenal and I hope that the Minister will accept it.
Edward Miliband (Doncaster North) (Lab)
I rise to speak to new clause 11, which was tabled in my name, that of my hon. Friend the Member for Sheffield Central (Paul Blomfield) and those of Members from five other parties across the House. I thank the hon. Members for Westmorland and Lonsdale (Tim Farron), for Brighton, Pavilion (Caroline Lucas), for Beverley and Holderness (Graham Stuart), for Central Suffolk and North Ipswich (Dr Poulter), for Belfast South (Dr McDonnell) and for Arfon (Hywel Williams) for their support. I also thank my Front-Bench team and Baroness Worthington in the other place for her support and advice.
The new clause would insert the commitment to zero emissions in the Paris climate change agreement into our domestic law, with the Committee on Climate Change advising on when it should be achieved. It is the right thing to do and the science is clear: the world needs to get to zero emissions early in the second half of this century, and it is worth reminding the House of the debate’s context.
We know from recent scientific analysis that 2015 was the hottest year on record. The record for global temperatures has been broken in each of the past five months, with February’s record broken in shocking fashion. Atmospheric concentrations of CO2 are now higher—this is hard to get your head around—than they have been for at least a million years. That is what the scientists tell us and it highlights the necessary urgency, which is shared by Members on both sides of the House.
My proposal makes economic, moral and political sense. It makes economic sense because we have to get to zero emissions eventually. It will be tough, so we need to start planning now. We are already aware of some of the tools we will need, but not all of them. We need clean energy supplies, a revolution in the household sector and reforestation. As the hon. Member for Aberdeen South (Callum McCaig), who speaks for the SNP, said, we need carbon capture and storage to trap emissions. We will also need other technologies that are in the early stages of development. Crucially, we need to start the work now so that we can get to zero emissions at least cost. The economic case is proven by the support from the business community, and I thank Aviva, GSK, Unilever, Kingspan, Kingfisher and the broader “We Mean Business” coalition for their backing. The proposal also makes moral sense. Achieving zero emissions is necessary, so it would be irresponsible to pretend otherwise. Future generations will look badly on a generation that stuck its head in the sand and refused to plan ahead.
Rebecca Pow (Taunton Deane) (Con)
I have enormous respect for the right hon. Gentleman. I applaud his positive steps and everything that happened in the 2008 Act, but we must be economically realistic. I wonder whether this is the right time and whether it might be better to ask the Committee on Climate Change to have a closer look at the proposal. After all, we are in the process of agreeing the first carbon budget, so perhaps all the energy should be put into that.
Edward Miliband
I agree with the end of the hon. Lady’s point. My proposal is deliberately pragmatic. It would put zero emissions into law, but the date would be decided by Government on the basis of advice from the Committee on Climate Change. That is right and it would be the lowest-cost way of proceeding. We need the experts’ advice. After all, they were appointed with cross-party support.
I am delighted to say that since I made this proposal three months ago I have had constructive discussions with the Government. I will not try to predict the reaction of the Minister of State, but I want to record my thanks to her, the Secretary of State, and the Minister for the Cabinet Office for their willingness to engage. I hope that we can move the idea forward in the months ahead and demonstrate once again the cross-party commitment to tackling climate change that is shared by the vast majority of hon. Members. I look forward to the Minister’s response.
Mr Alistair Carmichael
New clauses 5 and 6 stand in my name, but they are covered by other new clauses, so I do not intend to press either of them to a vote; the other new clauses lead in broadly the same direction.
First, let me deal with carbon capture and storage. When I intervened on the hon. Member for Southampton, Test (Dr Whitehead), the term I used in relation to the Government’s decision to pull the funding from the project was “irrational”. I hope I was not unkind to the Government in saying that, but if it was not irrational it must have been ideological. In any event, it certainly did not make any sense. A competition was running and the point at which they withdrew the funding was significant. Had they allowed the competition to run a little longer, it might have reached the conclusion that there would be no more money to be spent—who knows? We will never know now. The decision was irrational, because of the impact it will have on getting our own CCS sector up and running in this country. As he said, the work on this is being done elsewhere and inevitably we will end up playing catch up and importing expertise that could have been generated here. Who will ever suggest that a shareholder put money into CCS in this country? This is the ultimate failure of evidence-based policy. Notwithstanding the provisions on the amendment paper tonight, I now wonder whether it is worth calling for any more rethinks, because even if we got new Government commitment, who on earth is going to believe it, given events thus far?
The hon. Member for Aberdeen South (Callum McCaig) made the point that there is a synergy between CCS and the issues relating to decommissioning in the North sea. For some years, the technology used in CCS has been routinely and effectively used in the North sea in enhanced oil recovery; gas has been used to extract more oil from other parts of the existing substantial infrastructure network. It gladdens my heart that the Oil and Gas Authority goes from strength to strength, as I have followed the project closely from its inception, from the work of the Wood commission and through the creation of the shadow authority. To get the maximum benefit, it will be necessary for the OGA to get on, use the powers that we have already given it and those we give it in this Bill, and come forward with the strategy that will make these things happen.
Of course, for there to be a strategy there will first have to be survival, and the very real danger at the moment is that the age of the assets in the North sea, especially those in the north North sea, will mean that the critical mass may tip over and there is then a rush to decommissioning. Not only could any such rush be bad for the economy of the north-east of Scotland, and the Northern Isles in particular, but it would be tragic if it meant that the infrastructure was removed and the opportunities to develop CCS at some future date were therefore then lost.