EON WATCH

Ed Milliband on New Coal

In Ed Milliband on December 21, 2008 at 8:00 pm

Ed Milliband gave a speach at Imperial College London (PDF) on Dec 9th 2008.

An excerpt bellow…

Clean fossil fuels are a less sure prospect because of uncertainties around carbon capture
and storage, the great prize of clean coal and gas.

What is clear is that we cannot say that in twenty years time we will be building unabated
coal-fired power stations and that we will meet our carbon budgets. It’s not credible.
And the challenge is not simply domestic but international too.
When China is building two coal-fired power stations a week and 94 per cent of electricity
in Poland comes from coal, it is essential to develop CCS not just for the UK but for the
world as a whole.

Some might ask whether the effects of carbon capture and storage in the UK on the wider
world is really a calculation for our energy policy or a responsibility for us.
My response is to say that it is, because the costs for us, in this country, of the world not
meeting its climate change commitments, are so grave.

As Stern showed, the costs of not acting are greater than the costs of acting.
It is this global context to CCS which explains why we are so determined to ensure that we
do not simply get a European Union agreement on energy and climate change before the
end of the year, but that there is a proper EU commitment to investing in carbon capture
and storage.

And we know that we must do more in the UK to drive the path towards low carbon,
particularly CCS. So we will publish in the New Year proposals for how we can do that.
My conclusion is that sustainability requires a strategic role for government as well as
dynamic markets because governments must intervene to introduce a carbon price and to
overcome market failures which would otherwise mean that low-carbon technologies
would not be adopted.

Security of supply

What about security of supply, the most important obligation of government?
As I said at the start, we must keep the lights on in a world where we are net importers of
energy.

Furthermore, by 2020 a third of our power plants will be closed due to age or rising
environmental standards.

We now also face the added challenge of the credit crunch, which will increase the cost of
capital and poses particular challenges for the energy industry. This is something which is
an important focus for our new department.

The actions taken to recapitalise the banks are an important part of making credit available
to companies as a whole including the energy sector, but I recognise that no sector can be
immune from the current difficulties we are facing.

Of course, National Grid is responsible for balancing supply and demand on the network in
the short term, but in the end it is for government to shape the right medium-term
framework so the market delivers.

Moreover, the second Lawsonian conclusion that there was no point in looking ahead and
trying to guess the fuel mix seems too complacent as well.

As we increasingly become an importer of fuels, and as global competition increases,
government must take a view about whether our security is supported by sufficient
diversity.

So government must actively safeguard our security of supply by ensuring a range of
sources of gas – hence our interest in the Southern Corridor linking Europe to the Caspian
Sea and our interest in building gas supply from Gulf states, such as Qatar.

At the same time, we should promote a mix of fuels by driving the move into renewables,
nuclear and clean coal.

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