Carbon Capture and Storage

HC Deb 13 July 2004 vol 423 cc1382-90

Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg.]

7.6 pm

Mr. Bob Blizzard (Waveney)

I am particularly pleased to have secured this debate on a day on which we have been considering the Energy Bill, as I believe that the topic, carbon capture and storage, holds the key to one of the most important issues underlying debates on the Bill throughout its stages.

Most people accept that one of the greatest problems that we all face on the planet is that we are producing too much carbon dioxide, and that we must tackle it. The simple solution is to reduce massively the amount of CO₂ that we create, but it is easier said than done, given our patterns of life and our dependency on certain technologies that create CO₂. Therefore whatever one's political stance, it is unlikely to be achieved quickly. Without downplaying the need to avoid creating CO₂ emissions in the first place, we also need to consider dealing with the CO₂ that is emitted. I am talking about capturing the CO₂ from both coal and gas-fired power stations, and other major industrial sources, and storing it deep underground.

Will it work? We already know that we can store CO₂ deep underground for 10,000 years or longer, in depleted oil and gas reservoirs in the North sea and all over the world, which held the materials that we have extracted, naturally and securely, for millions of years. That is already happening at Weyburn in Canada. But further immeasurably massive capacity exists to store CO₂ in the saline aquifers deep beneath the sea bed. That is already happening in the Sleipnir gas field in the Norwegian sector of the North sea. It complies with the OSPAR regulations, and there have been no leaks.

That process is also being piloted in Texas where, for example, it is thought that the Frio geological formation could store between 200 and 350 billion tonnes of CO₂ —30 years worth of the 7 billion tonnes that we create through human activity each year. Scientists there expect that the CO₂ plume might spread a few hundred metres over tens of thousands of years, but do not see any risk of a large and dangerous escape from naturally sealed reservoirs. Let me emphasise that I am not talking about just dumping CO₂ in the deep ocean, as was once suggested.

Carbon capture and storage is safe, but do the public think it safe? The Tyndall centre for climate change research in Manchester carried out a survey and found, first, that nobody had ever heard of CCS, but when it was explained, although most people said that they would rather see a move to renewable energy and improved energy efficiency, they thought that it could solve a problem in the next few decades as part of the solution, and they preferred it to nuclear power. CCS could provide a bridge for the CO₂ emissions problem to 2050 and probably well beyond, but there is clearly much more applied research and development to be done before CCS becomes a fully commercial solution.

My hon. Friend the Minister for Energy, E-Commerce and Postal Services, in answer to my oral question last week, said that it is difficult to envisage CCS becoming viable before 2020. But his Department's report, "Review of the Feasibility of Carbon Dioxide Capture and Storage in the UK", which was published in September last year, said: earlier deployment could occur to tie in with the pattern of electricity plant replacement. In addition CCS in combination with Enhanced Oil Recovery —about which I shall speak shortly— could be implemented from about 2010. But that will only happen—even the 2020 deployment will only happen—if the Government get fully behind CCS now. The lead-in times are necessarily and inevitably long, and the investment needs to be attracted.

Why do we need to bother with this? A huge expansion in renewable energy generation and energy conservation is, rightly, the cornerstone of Government energy policy as set out in the White Paper. But there is still a big problem. A graph produced by the Department shows that even if we meet the difficult 20 per cent. renewables target and implement the White Paper's energy efficiency policies, according to the latest DTI energy predictions—published in May—the carbon dioxide emissions reduction target will go off track in 2010, and the 60 per cent. reduction sought by 2050 will not be achieved unless something else is done. There will still be a gap.

As a short-term fix, we could close all the coal-fired power stations and substitute gas; but I think that many of my hon. Friends would be rather concerned if we did. There seem to me to be only two options: it is CCS, or a new generation of nuclear power stations. We may eventually need both, but for various reasons we must have more than just the nuclear option available. Because of the long lead-in times, we shall have to make a strategic decision fairly soon. The Prime Minister said that only last week, although he only mentioned the nuclear option. I want to demonstrate that there is another option, although CCS is not as well known as nuclear power and does not yet have established political and industrial support.

In deciding how to fill the emissions reduction gap, we must look at the impact on energy policy and on other existing and planned energy sources. Let us consider renewables first. The Government recognise that if we invest in new nuclear power now, investment in renewables would be killed off. So the White Paper creates a window for renewables. If we have no other option, however, it could be quite a small window.

Investment in nuclear power is incompatible with investment in renewables. Because of the huge capital cost, the start-up cost and the low operating costs, once the investment in nuclear power has been made it will keep renewables out for a long time. It is inflexible. No one will close a nuclear power station early once the investment has been made. Nor should we forget that the huge cost of nuclear clean-up has made it uneconomical. We know the costs to the taxpayer attached to that part of the Energy Bill which we have just passed: £48 billion. We need to keep the nuclear option open, but we must not proceed yet.

There are some who fear that CCS will just prolong fossil fuel generation, to the detriment of the development of renewables. CCS is actually a bridge in the long changeover to a low-carbon fuel economy, giving renewables more time to be nurtured rather than being snuffed out. It is flexible by virtue of its cost structure. We could abandon it in favour of more renewables if we wished.

We also need to look at the implications for coal and gas. For reasons of reliability and security of supply, we will have to continue a balanced energy policy including fossil fuels—for some time, especially as we cannot be certain that we will achieve the 20 per cent. renewables target. It is equally vital that we comply with CO₂ reduction commitments and future targets.

I represent a coastal community which I do not want to disappear under the sea, but CCS squares the circle. We still have plenty of the gas that has given us cheap energy and enabled t is to meet our Kyoto commitments, although we will become a net importer in a few years' time. Most other countries are not in such a strong position on the percentage of indigenous gas used for power generation. Huge reserves of gas remain in the world—we will source piped gas from Norway and Russia and liquefied natural gas from all over the world. CCS enables us to use that gas and deal with CO₂, emissions. I do not know much about coal, but CCS is probably its only long-term future.

What about the cost of CCS? The costs are comparable to the published costs for most low-emission options that are not entirely straightforward, such as offshore wind, and they are estimated to be comparable with those of nuclear power—the difference is 1p per kilowatt-hour at most. The DTI report, which I mentioned earlier, said: Current costs for CCS are estimated to add 1-2.3p/kWh to the cost of electricity", but costs can be brought down to 0.2 to 1p per kilowatt-hour. if CCS is combined with enhanced oil recovery. The injection of CO2 into depleted reservoirs can enable more oil and gas to be recovered and enhance the usable quality of the oil, extending the life of oil fields in the North sea, which would bring economic benefits such as jobs and tax revenues for public spending.

Much of the infrastructure, such as pipelines, already exists and could be re-used, and we could avoid some of the environmental challenges associated with decommissioning. Again, there is only a certain window of five to 20 years in the time scale towards the depletion, abandonment and decommissioning of the oil and gas infrastructure in the North sea. We should not and must not miss the opportunity, but the market will not deliver FOR alone, and the Government must take a strong line on CCS to send out the right signals to the industry.

We hear that hydrogen fuels are the fuels of the future, and fuel cell technology for transport must form part of the strategy for CO₂ reduction, but where will the hydrogen come from? Fossil fuels are the most likely source, but CCS will be needed to deal with the CO₂ produced in making the hydrogen.

In conclusion, the DTI recognised the important role of CCS in the White Paper and its subsequent report. The technology will need to deliver and prove that it can deliver, but if we are to develop it further, we need a Government policy steer and some support. We must fill that emissions reduction gap, and CCS can deliver a three-way win.

First, CCS offers a win on security of supply. It squares the fossil fuels that we will need to keep the lights on with the vital CO₂ reduction targets. It could enable a more gradual transfer from self-sufficiency in oil and gas to imports, and we could derive valuable income internationally from the massive storage facility we have in the North sea. Secondly, CCS offers an environmental win. It reduce. CO₂ emissions dramatically and provides time for renewables to develop unthreatened by a commitment to a long-term alternative. Thirdly, CCS offers a political win. It would be more acceptable to people than the sudden switch in lifestyle demanded by some of the more radical green alternatives to deal with CO2 and climate change, which mainstream political parties find it difficult to talk about, let alone implement. Have we really examined the political implications of authorising a new generation of nuclear power stations? CCS may be an easier choice, although we may need both.

CCS could offer other wins, such as a big global win. It is a workable, near zero-emissions solution for fast growing energy users such as China and India, which seem unlikely to want to give up their enormous coal reserves in favour of renewables. Tile west alone cannot tackle global warming. We have the opportunity to develop, supply and sell the technology—if we take a lead and derive the economic benefit s of being a leader in such an industry. Australia, with its seemingly unlimited reserves of coal and gas, appears to be thinking this way too, and it is pursuing CCS. But to be a winner, we must act now and push ahead wish developing the technology. At the very least, we roust make the same commitment that is being made to keep the nuclear option open; I am not sure that we are doing so in terms of supporting development work for CCS.

Just as the nuclear option needs to be kept open, so the CCS option needs to be opened; moreover, the CCS/ EOR option needs to be exercised in time. The Government should make sure that people have a range of low-emission generation options when those decisions have to be made in two to four years' time. It will be interesting to discover what choice people make.

In answer to another of my oral questions, I was told that CCS is a medium-term solution. The world has a medium-term CO₂ problem, and if we do not stabilise emissions by 2050, it will probably be too late to bother. Either we stop using fossil fuels, or we capture CO₂ and store it. That is not a hard political decision to make.

So I ask my hon. Friend the Minister to recognise the potential of CCS and the policy and political advantages that it has to offer. I am not asking for blind faith in a not fully proven technology, but I am asking him to put his weight behind it, so that it is given an opportunity. It would be terrible if it were the best idea ever that was never given a chance.

7.21 pm

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)

I congratulate my hon. Friend the Member for Waveney (Mr. Blizzard) on securing this debate. He is an indefatigable campaigner on this topic, on which he secured an Adjournment debate in March, and as he said, he pressed me on it during Trade and Industry questions only last week. I am also grateful to him for his contribution to the debate on the Energy Bill, to which we have just given a Third Reading. His work as chairman of the all-party group on the offshore oil and gas industry is of course highly appreciated by the industry.

My hon. Friend works closely with the United Kingdom Offshore Operators Association, does a great deal of work on the issues facing the industry and puts a lot of effort into considering the offshore industry's long-term strategic opportunities. For example, he was active and vociferous—and from my point of view very helpful—on the question of offshore wind during consideration of the Energy Bill. He has also been an active campaigner for carbon capture and storage, which could also provide a big opportunity for the offshore industry.

We are well aware of the opportunities that CCS could provide in achieving our energy White Paper target to reduce carbon emissions by 60 per cent. by 2050. We certainly have not lost sight of its potential and the contribution that it could make to sustainable and secure energy supplies. I agree with my hon. Friend about the urgent need to move decisively in that direction.

We have investigated the feasibility of such technologies because we recognise their future potential and, more recently, we have undertaken two in-depth studies of CCS. The first investigated the feasibility of CCS as a means of disposing of the CO₂ emitted by power generation that uses fossil fuels such as coal and natural gas. The second looked at the possibility of using CO₂ to enhance the recovery of oil from our depleting oil fields, an idea to which my hon. Friend referred in particular. Both studies were undertaken in full consultation with the industry and others. We are building on that work and officials in my Department are developing a new carbon abatement technology strategy that will be of particular interest to him. It will begin to map out the work needed to help make these technologies commercially viable. Our aim is to publish the strategy at the turn of the year, but I hope that there will be an extensive public consultation beforehand to support it. We plan to publish the consultation document in the next few weeks to kick off the consultation.

The new strategy will replace the existing cleaner coal technology programme. The fourth and final call for proposed projects under that programme was made in February. Presently, 10 projects have been shortlisted for further consideration. The last call moved the emphasis of research and development into CO₂ reduction rather than the abatement of other emissions from coal-fired power generation. It is generally recognised that technologies to control emissions of acid gases—SOx and Nox—are now sufficiently developed that they no longer warrant Government support. A new carbon abatement technology research and development programme arising from the new strategy will focus specifically on CO₂ capture and improving efficiencies from traditional generating technologies.

We have started work on defining the new strategy in the context of the conclusion from the energy White Paper. As a first step, the industry-led advanced power generation technical forum has developed an industry view on what the new strategy should cover. A report from the consultancy, NERA, reviewing the old cleaner coal technology programme and making recommendations for a new carbon abatement technology strategy was produced in June. Those and other reports, together with the public consultation, will provide the basis for the development of the new strategy. That will be significant for the aims that my hon. Friend has set out.

From the work completed to date, our conclusion has been that, although carbon capture and storage technologies could well assist us in meeting our 2050 target, they are unlikely to be ready and commercially viable before 2020, so they can be deployed only in the longer term. My hon. Friend rightly referred to some of the caveats around that conclusion. His point was accurate, but it is the case that mainstream commercial viability is likely to be achievable in that time frame. As I set out in answering his oral question last week, there are a number of hurdles that need to be overcome before the technology can be brought successfully to market. Our judgment of the time scale is very much in line with the judgment made in other countries—in the USA, for example, where the dependence on coal is significantly greater and where work is already in hand to identify projects such as FutureGen that will take a considerable number of years to develop. As I pointed out last week, there is a substantial price tag.

In discussing the barriers to carbon capture and storage, it is important to split the technologies into two distinct areas of capture and storage because each has a very different set of hurdles to overcome. First, on capture, the costs of the CO₂ capture technologies have to be reduced so that they become commercially viable and competitive with other low carbon solutions. There is not only considerable R and D required beforehand to get those costs down, but we need to tackle the energy penalty in capturing the CO₂ because the capture process alone takes up considerable additional energy. No one has yet demonstrated a fully integrated carbon capture and storage process, although the components have been used separately in a number of industrial applications. That is why the USA is planning to spend $1 billion over the next decade on the FutureGen project. We will follow it with great interest and work with the USA on some of the issues raised by it. In the meantime, there are other low to zero carbon technologies, such as renewable energy, wind power and offshore wind, which my hon. Friend has particularly championed, that will assist us in meeting our targets up to 2020.

Secondly, there are the storage issues and we need to address the reliable and permanent storage of CO_2. That is, when we store it underground, we have to be confident that it will stay there and will not leak back to the atmosphere. We are thinking along the same lines as my hon. Friend—that depleted oil and gas wells as well as saline aquifers beneath the North sea are likely to prove ideal repositories for CO_2. The British Geological Survey has estimated that we could store the UK's current annual CO₂ emissions for well over 100 years. That would certainly give us more than ample time to develop new, reliable, fossil-free power generation technologies. If that is to be an effective means of disposing of CO_2, we must be certain that we can safely and reliably store it in those locations.

There are a number of important issues arising from that requirement. On the legal side, we must make sure that we do not contravene the OSPAR and London conventions on dumping waste at sea. When the conventions were drawn up nobody was thinking of geologically storing CO₂ beneath the seabed, so those conventions are net clear about the legality of that, although I noticed what my hon. Friend said about Norway in that respect. We will need to work with the international community to resolve that challenge, and that will take a link time.

There are also opportunities for the UK from storing CO_2. The European Union emissions trading scheme that comes into effect in January could contribute towards the cost of capture and storage and could also earn credits from storing the carbon emitted by other countries. If we want to make sure that we can gain those benefits by earning carbon credits, a reliable monitoring and verification system will need to be established.

We must understand the risks around storage, the likelihood of leaks and the environmental impact on the ecosystem. Work to date by other countries—my hon. Friend mentioned two examples, Norway in the Sleipner gas field and Canada in the Weyburn oil field—indicates, as he said, that we can reliably store CO₂, but more work will be needed before we can be entirely confident.

A regulatory regime would need to be established to make sure of best practice and to cover the ownership and responsibility for stored carbon in the medium and the very long term. We should be aware that there would be some public concern about the wisdom of storing carbon beneath the ground and how secure that would be. We will have to be able to demonstrate that what we are doing is responsible and safe.

None of those barriers is insurmountable, but there is a good deal of work still to be done to bring us to the point where the technologies could be deployed with confidence. If the difficulties can be overcome, it is my view and the Government's view that there are considerable gains to be had, as my hon. Friend pointed out.

We recognise that much of our effort will be in collaboration with other countries—for example, with Norway on resolving the storage issues, with the USA under the US/UK memorandum of understanding on cleaner fossil fuel technologies and on developing capture technologies. and with EU member states on the proposed fossil energy coalition, which is preparing a case for support.

What I have not mentioned so far, although it is important, is the potential for hydrogen production from these technologies. My hon. Friend raised the question of where the hydrogen will come from in future. It is generally considered that the first generation of hydrogen will come from fossil fuel, rather than from renewables. Using natural gas-fired power plant with carbon dioxide capture would enable hydrogen to be produced, which would have applications not only for electricity, but for transport and for fuel cells. That alone gives us a strong incentive to research and develop carbon capture and storage technologies for future exploitation.

Our more recent report on the possibilities of using carbon dioxide for enhanced oil recovery was published in March. That work arose from the energy White Paper because we saw it as a possible first step to CO_2, storage, utilising the infrastructure already in place, as my hon. Friend pointed out, with the added benefit of the extra oil recovered and the commercial gain from that. From a good deal of consultation with the major oil companies operating in the North sea, it was clear that at present they do not see the technology as viable, due to the significant gap that exists between the revenue received for the additional oil recovered and the extra costs of adapting installations. as well as the cost of CO₂, capture.

However, we are maintaining a watching brief on this matter. The situation might change and my hon. Friend will be familiar with the pilot initiative on brown fields, which addresses the technical and commercial barriers to the further development of mature fields.

There has been some suggestion that we ought to be looking at a sustainable fossil fuel obligation comparable to the renewables obligation. I think that it is an interesting idea, although any such sustainable incentive would have policy, technical and financial implications that would require considerable study. A mechanism, similar to the renewables obligation, that was designed to promote the sustainable use of fossil fuels in electricity generation would be much more complicated to implement than that for renewables. Fossil fuel power plants emit a variety of noxious gases—such as the acid gases sulphur dioxide and nitrous oxide, as well as carbon dioxide—with varying degrees of intensity. In contrast, renewable technologies are carbon-free, or carbon-neutral.

I hope that I have been able to give my hon. Friend and the House some reassurance that the Government take carbon capture and storage very seriously as a way to make deep cuts in our emissions from 2020 onwards. We will be working on those and other matters in the new carbon abatement technology strategy that is being developed.

I warmly welcome the great interest that my hon. Friend has shown in this matter and the way in which he has drawn the House's attention to it again in this evening's debate. I look forward to working with him and others on this very important topic.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes to Eight o'clock.