Carbon Capture, Usage and Storage

Before we come to the next statement, may I reiterate the comments that Mr Speaker made earlier today? While the whole House understands that the business of government will go on during recess and that Ministers are required to respond to events, it is frustrating for hon. Members when statements are made during scheduled periods of recess, when the House is not sitting.

Thank you, Madam Deputy Speaker. I heard your statement, and Mr Speaker’s earlier.

With permission, I would like to make a statement on the Government’s carbon capture programme. Last week was a historic week for our energy system. On Monday, 142 years of coal-fired electricity generation came to an end, as Ratcliffe-on-Soar power station closed for the last time. I pay tribute to the generations of coal workers, at Ratcliffe and elsewhere, who powered our country for more than a century, and to power station workers; we owe them a huge debt. I am sure that sentiment is shared across the whole House. As one era ends and we begin the next stage of Britain’s energy journey, the Government are determined to create a new generation of good jobs in our industrial heartlands. On Friday, we began a new era, as Government and industry agreed the deals that will launch Britain’s carbon capture industry.

This has been a long time coming. I was proud, as Energy Secretary, to kick-start the process of developing carbon capture way back in 2009—some hon. Members were then still at school, and I am much greyer now—with a £1 billion competition. In 2011, that programme was cancelled by the coalition Government. In 2012, a new competition was announced, and in 2015, it too was cancelled. When we came to office, we inherited an in-principle aspiration to go ahead, but the very significant Government funding required had not yet been accounted for, so under the last Government we had fits and starts, dither and delay.

By contrast, just three months since we came to office, this Government have turned promise into reality. I can confirm to the House that we have agreed commercial terms, and £21.7 billion of funding over 25 years for five carbon capture, usage and storage projects across two clusters: HyNet in the north-west, and the East Coast Cluster in the north-east. This announcement will enable the construction of two transport and storage networks that will underpin this new industry. The highways for carbon capture and the deals we have agreed will also kick-start development of Net Zero Teesside, the world’s largest gas with CCUS plant, and—these are both in Ellesmere Port—Protos, a new CCUS energy from waste facility, and EET Hydrogen, the UK’s first large-scale blue hydrogen project, which is the cleanest in the world. They will crowd in £8 billion of private investment across the two clusters, creating 4,000 jobs in our industrial heartlands and building an initial capacity to remove over 8.5 million tonnes of carbon emissions each and every year. I pay tribute to the six new Labour MPs in Teesside and colleagues across the north-west who have been brilliant champions for those projects. This is just the start; we will have more to say in the coming months about carbon capture sites in Humberside, Scotland and elsewhere around the country.

This investment is the right thing to do for Britain. CCUS will unlock the decarbonisation of hard-to-abate sectors, from chemicals to cement; enable the production of low-carbon hydrogen; and, by capturing emissions from gas-fired power stations, play an important role, alongside renewables and nuclear, in delivering clean power by 2030 and beyond. That is why experts in bodies ranging from the Climate Change Committee to the International Energy Agency are clear that carbon capture is critical to our meeting our climate commitments. There are those who doubt that. To them I quote James Richardson, the acting chief executive of the Climate Change Committee, who said on Friday quite simply:

I call the shadow Secretary of State.

I thank the Secretary of State for giving me advance sight of his statement. While I welcome the news today, I am saddened, if not surprised, that he has not had the grace to acknowledge the work of the last Government in getting us to this place. I know that his opinion is not that of the many partners who have come together to get this project over the line, and it does a huge disservice to his officials, who have worked so incredibly hard over the last couple of years to get us here. As far as I can see, the only positive investments that the Labour party seems to have made in its first 100 days—the Blackstone artificial intelligence data centre in Northumberland, the sixth assessment report and now this—were negotiated under the Conservatives. This is what the right hon. Gentleman’s party has turned into reality: it has crashed business confidence, and overseen £666 million of assets from UK-focused equity funds fleeing the country. No wonder it has had to have a change of management.

In 2022, in the Energy Security Bill, we set out £1 billion of investment and the business models to support the CCUS market. Our aim was to have four industrial clusters by 2030. I must pay tribute to all who have worked together on those plans, including BP, Equinor, Eni, and all those involved with HyNet and the East Coast Cluster.

The brilliant Mayor of Tees Valley, Ben Houchen, has been a leading light in this regard for many years. I noted that the Secretary of State did not mention him, which was pretty graceless, but I am sure that he would like to welcome his work. I must also mention the former Chancellor, my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), who first announced Government support for carbon capture technology amounting to £20 billion last year. That, ultimately, was the breakthrough step that got us here.

The Secretary of State says that CCUS was not funded. Let me remind him of the extent to which he is resting his laurels on a set of draft policy statements for nuclear from back in 2009 that had no Treasury funding attached. I had agreement that at least £20 billion would be spent following the next spending review. The Secretary of State is a former Treasury spad, so he knows what that means. As always, it is the cheap politics that he reaches for. He is, I am afraid, the ultimate career politician. In fact, the funding that we had announced, which would run for 20 years, was about £200 million more per year than what he has set out today. Can he confirm that the projects have not been scaled back, and if they have been, will he tell us where the losses will be?

I know that the right hon. Lady is in a difficult position, and it rather showed today. Let us be honest: the truth is quite painful for her. She failed, as Energy Secretary, to get carbon capture over the line, year after year—well, to be fair, she was only in the job for 10 months, but certainly month after month. The funding was never secured, because there was not the political will from the Chancellor or the Prime Minister. We have seen a long line of 20 Energy Secretaries and 14 years of failure. I must give the right hon. Lady her due: she did try, I am sure; but there was nothing but dither and delay. When we came to office, the funding had not been accounted for as part of a spending review; it simply was not there. There was just a vague promise. Now it is quite difficult for the right hon. Lady, and perhaps we should have a little sympathy for her, because she has had to come to the House and see what a Government actually delivering looks like.

Let me deal with the right hon. Lady’s questions in turn. She had the brass neck to suggest that the problems at Grangemouth and Port Talbot were somehow due to the negligence of this Government. Let me tell the House about Grangemouth. I came to office with the closure of Grangemouth already announced and likely to happen. I have probably had more conversations with my counterpart in the Scottish Government than Tory Ministers had in 10 years, because they just were not interested. We should be extremely angry about that. So what did we do? We funded the Willow project, which the Tories did not fund. We added to the growth deal, which they did not do. We said that we would have a national wealth fund with the potential to fund Project Willow. We had none of that from the right hon. Lady. She just was not interested. She just did not care; that is the truth of the matter. Of course it is ideological, rather than accidental. [Interruption.] Yes, it is. A bit of honesty from the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie)! I noted that he was very honest about the right hon. Lady at the party conference. The truth is that the Tories did not have an industrial strategy because they do not believe in an industrial strategy.

I call the Chair of the Energy Security and Net Zero Committee.

Unlike the shadow Secretary of State, I am very pleased that the Secretary of State has announced jobs in Teesside—jobs from which my constituents in the north-west of England will potentially benefit. I am also very pleased that we have a Government who are committed to an industrial strategy, and who believe in Government working in partnership with business.

The Secretary of State mentioned just how important it is that we have this technology if we are to decarbonise; he quoted James Richardson in making the case. It will be crucial for the abatement of heavy industries such as chemicals, glass—the Secretary of State went to visit a glass factory in the north-west on Friday—and cement, but it will also be crucial for hydrogen production, for the new gas-fired power stations and, indeed, for converting waste into energy. How long does he think we will need this technology for the abatement of heavy industry, and how long does he think we will need it for hydrogen production and production from gas?

I thank my hon. Friend for his question; he makes a really important point. Some people are sceptical about the use of carbon capture and storage. The truth is that for hard-to-abate industries—cement, for example—unless we have CCS technology, either there will be no future for these industries or they will not be able to decarbonise. Yes, it is an investment, but it is absolutely crucial, and I am struck by what the IEA said. We are talking about probably 20% of industry, and we are doing the right thing for Britain and setting an example to the world.

I always say on these occasions that, when it comes to blue hydrogen and gas with CCUS, we need all the technologies at our disposal on this decarbonisation journey. It is going to be a primarily renewables-based system, but nuclear has an important role and we need dispatchable decarbonised or low-carbon generation as well. All these things have a role, and the pathway will become clearer over time, but this issue is so urgent that I want to have all the technologies at our disposal.

I call the Lib Deb spokesperson.

I thank the Secretary of State for his statement. The Liberal Democrats are committed to supporting British industries in cutting carbon emissions and getting the country back on track towards meeting our climate targets. It cannot be emphasised enough how significant it is that this announcement comes at the same time as we hear about the UK being the first industrial nation to close its last coal-fired power plant. We had been dependent on coal for 150 years, so that is absolutely key.

It is clear that the future lies with renewables and clean energy, where we need to bring urgency and the necessary scale of investment. The Conservative Government’s irresponsible roll-back from key climate pledges, and their failure to invest properly in renewable energy and home insulation, has left thousands of households vulnerable to fuel poverty as another winter approaches. The failure to move forward at pace in decarbonising our industries, our transport and our homes has left us needing to take difficult decisions. We support the need, recognised by the Climate Change Committee, for at-scale, long-term investment in CCS, particularly for hard-to-decarbonise industries such as chemicals, cement and steel manufacturing. We would like to see investment in existing industries, and we want it to meet environmental requirements.

While we are discussing history, I should mention that it was my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) who launched carbon capture and storage, which was yet again cancelled by the Conservatives. However, although carbon capture and storage is a key tool in reaching net zero, it is also very expensive and complex, and evidence of its efficacy is still scant. Understandably, as the Secretary of State mentioned, there is much concern about the focus on incentivising industries to invest in CCS as an alternative to radically reducing their emissions. Therefore, it is important that the Government set out clearly and transparently the path to delivery for any CCS they invest in and show the milestones for progress. What will the Secretary of State do to increase investment—

Order. I call the Secretary of State.

May I begin by welcoming the hon. Lady to her place, and thanking her for the tone and substance of her remarks? She is right to underline the fact that we are marking a new era but also marking the passing of an era, and it is right to pay tribute to all the people who worked in our coal-fired power stations and, indeed, who worked underground to dig coal for our country. It is a big moment of change and the passing of an era.

On the hon. Lady’s broad points about CCS, my philosophy is that we want zero-carbon power where possible, but we also need carbon capture, particularly for hard-to-abate sectors and so that we can have not unabated gas, but gas with CCS or hydrogen power. She raises the question of cost. Imagine if we had had this conversation 15 years ago, when I was Secretary of State and much younger—15 years younger, to be precise. [Interruption.] Yes, I am good at maths. Some people were saying at the time, “Why are you subsidising offshore wind? It can never be competitive with fossil fuels.” Now, it is among the cheapest technologies to build and operate. That is what deployment does for us, and that is what the combination of public and private sectors working together does for us. Yes, there is an investment here, but a far-sighted, forward-looking Government have to make such investments, and I welcome the hon. Lady’s support.

I had rather hoped that my right hon. Friend was going to start his statement by saying, “As I was saying before I was so rudely interrupted—”. I have waited so long to hear a Secretary of State make such announcements from the Dispatch Box, and I am delighted. However, my right hon. Friend knows that carbon capture technologies reduce the energy intensity of fossil fuels by up to 25%, which makes such electricity much more expensive than that produced from renewables. Can the Secretary of State confirm that CCUS will be used not simply to allow the continued extraction of fossil fuel for our power sector, but only for the hardest-to-abate heavy industries and for the production of green hydrogen, thereby keeping domestic fuel bills low and delivering on this Government’s commitment to decarbonise our power sector by 2030 through much cheaper renewables and nuclear, not more expensive gas with CCUS? Finally, may I caution him against swallowing too much of the hype around blue hydrogen?

I thank my hon. Friend for his question; he speaks with great knowledge and expertise on these issues. He is absolutely right about the hard-to-abate sectors. I say to him what I said to the Chair of the Energy Security and Net Zero Committee, my hon. Friend the Member for Sefton Central (Bill Esterson): there is a role for both blue hydrogen and gas with CCUS, but that is within the context of a primarily renewables-based system that uses nuclear as well. It goes back to the point about needing all the technologies at our disposal if we are to surmount the challenges we face.

The Secretary of State will be aware that the Humber area produces the most emissions in the country, and it is vital that we make progress in that region. Some £15 billion-worth of private investment stands ready. The Secretary of State mentioned that there will be a further announcement in the coming months. Could he perhaps advance that as quickly as possible in order that we can take our first steps towards reaching our targets?