Conclusions and recommendations
1. We
welcome the competition on post-combustion CCS from coal and recognise
that it will make an important contribution. However, we feel
it would aid the development of CCS if the Government were to
extend its support to a programme of demonstration projects, including
pre-combustion technology. Furthermore, the Government must view
its competition as only one part of a wider strategy; it must
continue to support other CCS projects including the development
and integration of the individual components and new CCS technologies.
While undoubtedly valuable, the competition must not detract effort
and resources from other work on CCS within the UK. The timely
development of a range of CCS technologies would also give the
UK a clear competitive advantage on the global stage. (Paragraph
8)
2. We are extremely
disappointed by the lack of progress on CCS. (Paragraph 9)
3. It is essential
for the Government to give a far higher priority to the development
of CCS. It must communicate and follow a clearer and more urgent
strategy in order to speed this development and provide a stronger
signal to industry. The indecision that has afflicted the development
of CCS up to now must end; any further delay will be extremely
damaging environmentally and will mean that the chance to gain
a competitive advantage is being squandered. (Paragraph 10)
4. Unless the Government
is able to show there is sufficient storage capacity there must
be some question about the long-term viability of CCS. (Paragraph
13)
5. The possibility
of CCS should not be used as a fig leaf to give unabated coal-fired
power stations an appearance of environmental acceptability. (Paragraph
14)
6. The current momentum
for new coal-fired plant is not taking adequate account of its
environmental impact and the challenges of developing and deploying
CCS technology. (Paragraph 15)
7. Replacing old coal-fired
power stations with new ones, rather than using alternative energy
sources, locks Britain in to a high level of emissions for many
years to come. The increased efficiency of new plants is nowhere
near enough to make unabated coal an environmentally acceptable
choice. Any alternative form of electricity generation would provide
significantly more substantial emissions reductions. (Paragraph
16)
8. It is true that,
in theory, the EU ETS cap should keep emissions within a certain
limit. However, the Government is wrong to rely on the EU ETS
cap to excuse the increase in emissions that would derive from
the new unabated coal-fired power stations. Emissions included
in the EU ETS do not disappear—they must be accounted for
somewhere. The EU ETS is a mechanism designed to reduce emissions;
using it as a cover for choosing high emissions technology goes
against the purpose of the scheme. Furthermore, it completely
ignores the risks to Britain's economic position if the carbon
price rises substantially in Phase Three of the EU ETS. The Government
should prioritise emissions reductions within the UK as soon as
possible. (Paragraph 17)
9. The Government
argues that coal has a role to play in meeting energy demand.
If this is true then the Government must prioritise the development
of commercial scale CCS. However, the argument that coal is essential
to guarantee energy supply must not be abused. Unless there is
a dramatic technological development, coal should be seen as the
last resort, even with the promise of CCS. We are concerned that
the Government is considering opening the door to a new era of
coal-fired generation because it is the easy option, and one that
generators will be only too willing to take. Such an approach
is extremely dangerous both environmentally and economically when
there is no certainty over when, or if, CCS will be commercially
viable. (Paragraph 18)
10. The Government
should make clear to industry that it will not permit the operation
of unabated coal-fired power stations in the longer-term. The
Government must take more urgent and ambitious steps to incentivise
the development and retrofitting of CCS and, equally importantly,
to prevent the prolonged operation of unabated coal-fired power
stations. (Paragraph 19)
11. There is no guarantee
that a plant approved on the basis that it would be CCS ready
will actually be willing or able to retrofit CCS once the technology
has been demonstrated on a commercial scale. We believe that planning
permission granted on the condition of CCS readiness is meaningless
unless the Government places a requirement on all power generators
to retrofit CCS as soon as it is available and to shut down any
power stations which are not then fitted with CCS. Such a requirement
would need to be supported by continued investment in research
and development and action to ensure that CCS becomes commercially
viable. (Paragraph 22)
12. With even the
Energy Minister recognising that there is no guarantee the carbon
price will reach a sufficient level to incentivise the deployment
of CCS, it is evident that the Government will need to accompany
its faith in the carbon market with measures to mandate the installation
of CCS technologies. (Paragraph 26)
13. We cannot rely
solely on the carbon price, either now or in the future, to ensure
the implementation of CCS technology. There is a real risk that
the EU ETS will not deliver a carbon price that will make CCS
cost effective. (Paragraph 29)
14. In our Report
on the 2007 Pre-Budget Report we recommended that the Government
'introduce some form of financial mechanism for incentivising
CCS power plants over conventional power stations', such as a
feed-in tariff for CCS plants, or contracts which guarantee funding
for the difference in costs between CCS and conventional plants.
The Government response to our Report failed to discuss the merits
of such measures, instead reiterating the role of the carbon price.
We fear that the carbon price will not deliver the level of incentive
that is needed in the short- to medium-term. We urge the Government
to develop and bring forward additional mechanisms that will provide
an incentive for CCS. (Paragraph 30)
15. The Government
cannot allow the prolonged operation of unabated coal stations;
doing so will make it very unlikely the Government will meet its
own carbon reduction targets. The Government should set a date
by which all power stations will have to have emissions per unit
of power generated below a certain limit (set in terms of kg CO2/MWh)
or face closure. This limit should be based on capturing at least
90% of carbon emissions. By setting such a deadline and making
its intentions clear a strong signal will be sent to the power
generation industry about the future of coal and the importance
of CCS. (Paragraph 32)
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