My Lords, with the leave of the Committee, I will also speak to Amendment 51KA and to the other proposed amendments to Clause 47. In the process of doing this, I am sure that I will be echoing some of the things which have already been said. It has been revealed that the Bill is utterly inconsistent in this connection. It has been revealed that it is schizophrenic because there seem to be two opposing factions driving the Bill.
I will begin by examining the implications of Clause 47. It declares a formula for calculating an emissions limit for electricity generating stations that is the product of three factors. The first factor is the rate of CO2 emissions in the grams per kilowatt hour of a station running efficiently and at full capacity. The second factor is the maximum capacity of the station. The third factor represents the assumption that the plant will be operating for 85% of the available hours.
In the discussion of these matters, attention has been concentrated on the emissions rate but it is clear that this does not tell the full story. The other assumptions also bear some examining. It seems unlikely that, whenever it is running, the station will be operating at full capacity. It is also unlikely that it will be in operation for 7,746 hours in the year out of the total of 8,760 hours—that is, for 85 percent of the time. The Committee can imagine a host of stations operating for much less than 85% of the available time, all of which fulfil their statutory limits as defined in the Bill, and all of which have actual emission rates far in excess of the statutory rate. The consequence would be an average rate of emissions that, likewise, exceeds by far the so-called statutory rate.
The statutory rate of 450 grams may be compared with the emissions rate of coal-fired stations and of stations employing combined-cycle gas turbines. A DECC press release of March 2012 estimates the former at 800 grams of CO2 per kilowatt hour and the latter at 400 grams per kilowatt hour. It follows that, whereas unabated coal-fired stations fall foul of the limits, the combined cycle gas turbine will fall well within them. Unabated coal-fired power stations also fall foul of European Union standards for limiting the emissions of nitrates and of sulphate particles.
In this country, the majority of these stations are reaching the ends of their lives. Therefore, we can assume that they have no future in their present form. Nevertheless, it will be essential to monitor the process by which these noxious stations are decommissioned. For that reason, Amendment 51KA asks the Secretary of State to publish and lay before Parliament the strategy for phasing out unabated coal.
It is estimated that, currently, the power sector has an emissions intensity of just over 500 grams of CO2 per kilowatt hour. The conclusion is that, after the demise of the coal and oil stations, nothing would need to be done to fulfil the emissions performance standard that is declared in the Bill. Therefore, the way is open for a second instalment of the so-called “dash for gas”, which would see virtually all new electricity generating plant taking the form of combined cycle gas turbine equipment. Moreover, it has been widely recognised that this is precisely the scenario envisaged by a powerful faction within the Conservative Government, which is led by the Chancellor, George Osborne.
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There are other factors that would intrude on this scenario that ought to be mentioned. The first is the existence of a carbon floor price, which is a levy to be imposed on industries if the market price of carbon falls below a certain level. Originally, coal was the only
carbon source in question, but now oil and gas also fall within the definition. If the floor price were to be used at a later stage as a mechanism for achieving the decarbonisation of Britain’s electricity-generating industry, an industry based on gas would bear a heavy burden.
The second factor to be considered is the EU emissions trading scheme. At present this is barely operative, with the prices of the permits far below a level that would impose an effective restraint on emissions. If the scheme were to become fully operative, a heavy burden would fall on the gas-powered electricity-generating industry; and this could be at a time when international gas prices were escalating hugely.
Of course, as has been thoroughly emphasised, we must also consider our obligation under the Climate Change Act to cut emissions by 80% by 2050. Clause 47, which declares a statutory rate of emissions of 450 grams per kilowatt hour, effective until 2044, suggests that this obligation can be utterly disregarded. If there is to be any chance of meeting the obligations of the Climate Change Act, something far more stringent is required, as many speakers have indicated.
The amendments to Clause 47 propose that the allowable emissions rate should be reduced to 300 grams per kilowatt hour and that the allowance should extend no further than 2029. What is required is a sequence of limits that become progressively more stringent as time elapses. Such a regime of tightening limits is also required if we are to send signals to encourage investment in renewable energy and in carbon sequestration—assuming, of course, that the latter will become an available and effective technology, which it is reasonable to doubt.
At present, there is a hiatus in the investment in renewable energy. Later, the Committee will have the opportunity to discuss the causes of this failure. For the present, we might look at the adjacent page of the Bill, where Clause 48 deals with the suspension of the emissions limits in exceptional circumstances. The circumstances in question are an electricity shortfall or a significant risk of an electricity shortfall. As we all know, there is already a significant risk of a shortfall. The impression given by Clause 48 is that the Government are readily contemplating the abandonment of the emissions standards. In accepting the amendment to Clause 47, they have the opportunity to allay that suspicion, and I hope we will hear something to reassure us.