WIREDGOV

Major drive to decarbonise energy sources: Prime Minister

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2007/107) issued by The Government News Network on 19 November 2007

Key roles for renewables and carbon capture and storage in the UK's diverse low carbon energy mix

A major expansion of energy from renewable sources and the launch of the competition to build one of the world's first carbon capture and storage (CCS) plants were among the measures set out today in a major speech on climate change by the Prime Minister.

The speech comes on the day the Commission on Environmental Markets and Economic Performance (CEMEP) publishes its Government-commissioned report setting out the steps needed to unlock the business opportunities that exist in tackling climate change.

Business and Enterprise Secretary John Hutton said:

"The direct link between tackling climate change and long-term wealth creation is now beyond doubt. The business opportunities, once fully unlocked, will be vast.

"Pioneering low carbon technologies, including renewables, CCS and, subject to our decision, new nuclear, will help secure diverse future energy supplies while tackling climate change. In a global market the UK's expertise in developing these technologies will also open up business worth billions.

"With China alone building an average of two coal-fired power stations every week, the development in the UK of technology to capture and safely store up to 90% of CO2 emissions is critically important. The launch of the competition today puts the UK on track to build within seven years one of the world's first commercial-scale CCS projects on a coal-fired power station.

"The CEMEP recommendations will be central to helping the government give business the long term certainty they need to invest in the development of cost-effective solutions to environmental problems."

Developments announced by the Prime Minister today include:

* Tidal lagoons and barrages below one gigawatt capacity will receive extra support through the Renewables Obligation, potentially benefiting lagoons proposed for Rhyl, Swansea Bay and elsewhere.

* This follows the previous announcement by John Hutton of a feasibility study into the possibility of generating tidal energy from the river Severn. A Severn barrage of potentially 8.6GW capacity could generate 5 per cent of Britain's electricity;

* The launch of the Government's Carbon Capture and Storage competition. This follows the previous announcement by John Hutton that the project should demonstrate post-combustion CCS on a coal-fired power station, with CO2 stored offshore. Post-combustion technology is the most globally relevant technology. It can be retro-fitted to the vast proportion of existing and planned coal-fired power stations globally and it complements the developments in Norway and the United States of alternative CCS technologies; and,

* Following consideration of the responses to its consultation, the Government will announce a decision on future nuclear power in the new year.

Also published today, the report by the Commission on Environmental Market and Economic Performance (CEMEP) describes how the threat of climate change will stimulate investment in new technologies and innovations and help transform existing sectors of the economy, creating entirely new industries. The Commission concludes that:

* The overall added value in the low carbon energy industry could be as high as $3 trillion per year worldwide by 2050, employing more than 25 million people. The opportunities could be even greater as low-carbon technologies become pervasive across the economy;

* To seize these opportunities the UK needs to match the leading locations in the world to innovate and do business in environmental markets. We must attract the investment today to help create tomorrow's prosperity, jobs and cleaner environment; and,

* Action is needed to create a clear and credible environmental policy framework and to provide increased support for innovation. In particular there should be greater use of the public sector's £150 billion spending power to create 'lead markets' for new products.

A Government response to the report will follow and John Hutton will host a Green Business Summit in the New Year.

Notes for editors

1. The Prime Minister was speaking at the WWF 'A One Planet Future' event in central London. A copy of his speech can be found at http://www.number-10.gov.uk

2. Carbon Capture and Storage (CCS) is a type of Carbon Abatement Technology in which the carbon in fossil fuels is captured (as CO2) and committed to long-term storage in geological formations such as depleted oil and gas fields. The Government will provide up to 100% of the additional capital and operating costs incurred by the project developer in successfully demonstrating the technology on a long term commercial scale. The pre-qualifying period for the competition will end in March 2008. Companies that successfully pre-qualify will be invited to take part in the next stages of the competition in April 2008, with the aim of announcing the competition winner by May/June 2009.

3. An information memorandum for potential CCS competition entrants is published today at: http://www.berr.gov.uk/energy/sources/sustainable/carbon-abatement-tech/ccs-demo/page40961.html

4. The potential that the North Sea has for CO2 storage was also outlined today with the publication of a report from the North Sea Basin Taskforce. The study identifies potential storage sites in the North Sea, assesses the possible need for a pipeline infrastructure to transport CO2 around the North Sea and the potential costs of such an infrastructure. It also identifies the economies of scale that could arise from the co-ordinated development of the infrastructure. The North Sea Basin Task Force was initiated by Norway's then Energy Minister, Odd Roger Enoksen, and the Energy Minister, Malcolm Wicks, in 2005. The aim of the Task Force is for UK and Norway (and now the Netherlands) to co-operate on areas of work that can help the development of CCS.

5. The Commission on Environmental Markets and Economic Performance (CEMEP) was an ad-hoc advisory body established in November 2006. Commission Members were drawn from a diverse range of interests, including public bodies, industry, NGOs, the research community and the unions. Full Commission meetings were chaired jointly by Alistair Darling and David Miliband, the then Secretaries of State for Trade and Industry and Environment, Food and Rural Affairs. Ian Pearson and Malcolm Wicks, now Science and Innovation and Energy Ministers respectively, also attended. Ministers provided guidance on the Commission's early thinking and emerging recommendations, but the final report and recommendations are agreed by non-Government Members of the Commission, and are addressed to Government as whole.

6. The CEMEP report can be found at: http://www.defra.gov.uk/environment/business/commission/index.htm

7. Tidal lagoons are walled impounded areas within an estuary (more akin to a swimming pool than a barrage or dam). They can be freestanding or alongside the bank/shore. They generate electricity from the rise and fall of the tides in the same way as a barrage. Work is currently underway to identify the level of support that tidal lagoons and barrages up to 1GW should receive through the Renewables Obligation. The detail will be included in the response to consultation on the RO. It will be higher than the current level of 1 ROC. This announcement does not apply to a Severn Barrage, which would almost certainly be above 1GW capacity. It's unlikely that the RO in its current format would support a Severn Barrage.