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Column 436Patten, Chris (Bath)
Pattie, Rt Hon Sir Geoffrey
Peacock, Mrs Elizabeth
Porter, David (Waveney)
Rifkind, Rt Hon Malcolm
Roe, Mrs Marion
Sackville, Hon Tom
Sainsbury, Hon Tim
Shaw, David (Dover)
Shaw, Sir Giles (Pudsey)
Shaw, Sir Michael (Scarb')
Shelton, Sir William
Shepherd, Colin (Hereford)
Smith, Tim (Beaconsfield)
Soames, Hon Nicholas
Spicer, Sir Jim (Dorset W)
Spicer, Michael (S Worcs)
Stewart, Allan (Eastwood)
Stradling Thomas, Sir John
Taylor, Ian (Esher)
Taylor, John M (Solihull)
Taylor, Teddy (S'end E)
Thompson, D. (Calder Valley)
Thompson, Patrick (Norwich N)
Twinn, Dr Ian
Waddington, Rt Hon David
Wardle, Charles (Bexhill)
Tellers for the Noes :
Mr. David Lightbown and
Mr. David Heathcoat-Amory.
Question accordingly negatived.
Column 437Amendments made : No. 79, in page 3, line 4, after charged', insert to tariff customers'.
No. 80, in page 3, line 5, leave out by them'.
No. 2, in page 3, line 24, after them', insert--
(bb) to protect the public from dangers arising from the generation, transmission or supply of electricity ;'.-- [Mr. Michael Spicer.]
(d) to promote the efficient and economic use of heat co-generated with electricity in combined heat and power plants or stations.'.
(4A) That electricity generated in a combined heat and power plant shall be treated for the purposes of subsection (4)(a) above as generated by a non- fossil fuel generating station for the proportion of the electricity produced that is equivalent to the measured quantity of heat distributed at a temperature greater than 60 C or more from the power station.'.
No. 149, in clause 30, page 25, line 17, at end add
; and electricity generated in a combined heat and power plant shall be deemed to be generated by non-fossil fuel'.
Mr. Barron : Clause 3 relates to the general duties of the Secretary of State and the Director General of Electricity Supply after privatisation. That is a crucial matter which we debated with great interest in Committee and should like to discuss again on Report.
The amendment seeks to give the Secretary of State and the director the duty
"to promote the efficient and economic use of heat co-generated with electricity in combined heat and power plants or stations." It does not say exactly what type of plant that should be, and I do not want to go into that in great detail. However, I ought to give the reasons for the amendment.
Like many others, we believe that combined heat and power has not been treated properly. That form of co-generation has been in use in this country for a very long time, and we believe that there is a case for treating it effectively under the new regimes that are to take over from the Central Electricity Generating Board. Most people have no doubt that combined heat and power can make an important contribution. Indeed, larger schemes could make a dramatic contribution to the reduction of greenhouse gases--an issue which the Cabinet, and in particular the Prime Minister, has brought up. Over the last few months the Government have been saying that they are deeply concerned about the situation. The larger CHP schemes in this country could reduce emissions by at least 3 per cent.--and in some cases are doing so.
The Government tell us about the plans that are in the pipeline for smaller generators throughout the country after privatisation of the electricity supply industry. Experts predict that small-scale combined heat and power schemes, together with the larger ones, could cut greenhouse gas emission by up to 10 per cent. It is recognised that the wider use of waste heat for electricity generation would also result in savings for industry and for national and local government.
Let me mention briefly one or two of the current schemes which demonstrate the way in which many areas benefit, not just in the generation of electricity. The wider application of combined heat and power schemes in urban areas would stimulate urban regeneration, particularly in
Column 438inner cities. For a number of years-- certainly since the last general election--this has been a major theme of the Prime Minister. She has said that she will take effective action in the inner cities. We do not see much effective action being taken by the Government on CHP, despite the fact that such action could make an important contribution to urban regeneration. If the Government were to accept amendment No. 136, they would be going some way towards finding ways of doing that.
Two papers were published recently by the Government. I understand that one of them shows that up to 4,000 sites in this country could benefit from combined heat and power. The other, which I think was produced by the Energy Efficiency Office, says that up to 1,500 major industries could be using combined heat and power. Perhaps the Minister will mention that in his intervention. So this is not a small matter ; the system could be applied widely and quite flexibly.
Our amendments, particularly No. 136, would enable the opportunities to be grasped. They would put combined heat and power on at least an equal footing with the generating options that are being promoted in the Bill. I do not intend to return to yesterday's debate, but I remind the House that the Government are making sure that we will have nuclear generation for a considerable time. The same could be done for combined heat and power.
There is an amendment in the name of the hon. Member for Erewash (Mr. Rost) about giving some form of protection that was offered by the Secretary of State yesterday. The Secretary of State talked about a new tranche of capacity in non-fossil fuels being reserved exclusively for renewables. We shall see what the Secretary of State does about an amendment that could result in a combined heat and power tranche. If he undertook to consider that proposal, he would probably have the support of the whole House.
Successful combined heat and power schemes are being organised despite, rather than with, the assistance of the Government, mostly in areas controlled by Labour authorities. For example, Labour-controlled Waltham Forest council has won a major award from British Gas for its pioneering scheme which, among other things, is helping to keep the elderly of that Greater London area warm. In Sheffield, the Labour-controlled city council has created the first European-based joint venture to develop a combined heat and power scheme, and in the first stage of that scheme local tenants are receiving heat from an incinerator burning domestic waste. It will be a privilege for me tomorrow to visit the area and observe that scheme.
The Labour city council of Leicester is actively supporting a joint venture with the private sector to introduce a major combined heat and power scheme. Newcastle, another Labour-controlled area, is continuing to work with the local business community and the electricity industry to create a combined scheme for the area. In south London, the Labour councils of Greenwich, Southwark and Lewisham are working with a few private sector companies to initiate a combined heat and power scheme based on energy from waste. The hon. Member for Erewash and others will be aware of the amount of heat that is wasted in power stations. Let us harness that energy and send it out into the community to heat hospitals and domestic dwellings and thereby contribute to the nation's energy resources.
Column 439In a BBC television interview on 15 January, the Secretary of State said that he supported the idea of combined heat and power schemes, and he claimed that CHP would be encouraged by, and CHP technology would gain from, privatisation. There is no evidence of the Government turning those fine words into deeds.
On Second Reading, I referred to the way in which the Energy Act 1983 had failed to provide openings for new and diverse forms of energy generation. The CEGB and other generating companies have made it impossible for those interested in combined heat and power schemes to get into the market and sell electricity. Nothing has been said by the Government in these debates to encourage those who are trying to promote combined heat and power schemes that this legislation will prove more helpful to them than the 1983 Act. The Government should accept the amendment and show their willingness to move forward on combined heat and power in the interests of the environment and the economy. There are many benefits to be had from combined heat and power.
Earlier in the debate the Grimethorpe fluidised bed project in south Yorkshire was mentioned. That is a way of enabling small generators to use coal cleanly and it avoids much of the air pollution that arises from the burning of fossil fuels, especially coal. I thought that the Minister would say that the Government would fill the gap that British Coal has encountered with that project. That project on fluidised bed combustion leads the world, and if we do not make sure that the final phase, the topping phase, is funded other countries will take the lead.
Just before the Easter recess I was in Japan where fluidised bed combustion is being developed. We must not let our project fall at the end of the year. When it is commercialised in perhaps one or two years it could well fit into combined heat and power schemes. If we let the project lapse, I have no doubt that in 10 to 15 years the Government will buy Japanese technology on fluidised bed combustion, just as we are currently buying Japanese technology on flue gas desulphurisation, a technology which has been working in Japan for over a decade in coal-fired power stations. This year we have had to buy it for our big coal burners and have had to start a programme using Japanese technology.
The Opposition are in favour of developing British technology. The Minister spoke about the Grimethorpe fluidised bed project and said that he would probably be able to make a statement about it, but wanted more commitment from industry. That is like approaching a potential car buyer and saying to him, "I want you to invest in a new car. However, we have not quite finished the engine technology and we don't know exactly how it will work." No car salesman, not even the Arthur Daleys among Conservative Members, would try to sell such cars on the high streets of Britain.
We need to prove the technology that will fit in well with combined heat and power and Britain's technologists must be allowed to continue their development. The project needs about £11 million, but it has not been offered that in the debate. That money is required over three years and it is a mere pittance compared to the amount that the Bill is writing off in the nuclear industry. Not hundreds of millions but thousands of millions of pounds of taxpayers' money will be set against the excessive costs of the nuclear industry in the years ahead.
Column 440Month in and month out we have had to fight and argue with the Government in an attempt to get a commitment from them to follow private money into Grimethorpe to make sure that the technology is proved and that we are world leaders in the clean combustion of coal. Amendment No. 136 would commit the Secretary of State and the Director General of Electricity Supply to take seriously combined heat and power and all its benefits. I hope that the Government will say that they are at least prepared to look further at the matter. If they do not give that commitment, we may consider testing the amendment in a Division.
Mr. Peter Rost (Erewash) : I should like to speak to amendment No. 1. In 1973 I made my first speech in the House on energy efficiency and at that time hardly anybody had heard of combined heat and power. Over the past 15 years I have continued the campaign. As a result, I have an interest to declare because I have recently become a consultant to Associated Heat Services plc, the major company involved in the management of combined heat and power systems. The arguments developed over many years in favour of energy efficiency were intended primarily to conserve a finite resource, to use it and to produce it less wastefully. The argument now has additional force for environmental reasons. If the Government are right in the assumption that they have expressed again this evening that world and United Kingdom electricity demand is going to grow, there is little hope for the planet. If the greenhouse effect is shown to be caused by global warming as a result of burning fossil fuels, there is little hope for the planet if we continue to produce our electricity in the present wasteful way.
At the moment, we throw away two thirds of the fuel that we put into a power station by cooling water. That creates two or three times as much carbon dioxide--greenhouse gases--than is necessary. We could convert the cooling water into useful energy.
I maintain that amendment No. 1 is modest. I suggest that electricity produced combined with hot water should be classed as a non-fossil fuel, but only that proportion of electricity which displaces fossil fuel which would otherwise have to be burnt if the hot water from the combined heat and power plant was not being distributed and used for space heating. As a combined heat and power plant produces a thermal efficiency of about 70 per cent.--or twice as much as an electricity-only plant--and as nearly half the fuel is converted into useful hot water, that must displace other fossil fuel which would otherwise have to be burnt to provide space heating. We are really burning twice as much fossil fuel in this country than is necessary and we are doing twice over--once in our power stations and throwing it all away and then again to provide space heating. When electricity is produced in a CHP plant, fossil fuel is saved. The proportion of saved fossil fuel which is sold as useful heat for heating water should be entitled to be categorised within the non-fossil fuel band in the Bill.
I have no doubt that my hon. Friend the Minister will give this amendment serious consideration because this is such a modest proposal. From our electricity production, we throw away about 60 million tonnes of coal- equivalent and we must bear in mind that that produces a considerable amount of CO -type greenhouse gas. We
Column 441burn the same quantity of fossil fuel all over again to provide our space heating. Therefore, CHP can make an important contribution to reducing CO .
Yesterday in this debate my right hon. Friend the Secretary of State conceded that there will be a special slot for renewable energy categorised as non-fossil fuel. Why did he do that? He justified it on the grounds that we need diversity and security of energy supply and also because we want to do something to alleviate the environment threat.
The arguments in favour of this amendment are the same as those espoused by my right hon. Friend the Secretary of State. By using hot water from electricity production instead of throwing it away, we create more diversity, more energy efficiency and we reduce the greenhouse effect.
In recent years there has been increasing pressure from the EC, which will undoubtedly lead to a firm directive that we use energy more efficiently, less wastefully, and environmentally more acceptably. Combined heat and power is one of the EC's strongest recommendations. It is important that it is made to Britain, because we are bottom of the European league. Millions of citizens elsewhere in Europe already benefit from cheap heating in their buildings, which comes from power stations combined with electricity production. We have a lot to do to catch up.
Government studies over recent years identified and confirmed the enormous potential for CHP in the United Kingdom. I strongly support the remarks of the hon. Member for Rother Valley (Mr. Barron), but I believe that if the Government cannot go as far as the Opposition amendment goes they should at least seriously consider my modest proposal.
Combined heat and power is the only technology that can reduce fossil fuel burn and at the same time provide new electrical generating capacity--which are both urgent priorities for the future. I challenge my hon. Friend the Minister and other right hon. and hon. Members to name any other energy technology that can do the same. Combined heat and power is the only technology also to offer the biggest potential for greater energy efficiency. The Combined Heat and Power Association, which supports my amendment and helped me to present it, has for many years argued that the benefits of CHP are far wider than those that I described. They include urban renewal, better housing, better health, and the reduction of fuel poverty. The Select Committee on Energy is currently conducting an inquiry into the greenhouse effect. The evidence already received from many authoritative sources confirms that combined heat and power will reduce greenhouse gases to a greater extent, and more economically, than any alternative. There are several ways of reducing CO , including the use of nuclear and renewable fuels and energy conservation. However, they all involve a higher economic penalty than CHP, which is the least-cost option for reducing CO in the atmosphere.
If or when a consensus is reached by scientists
internationally--which they have made a move towards reaching at Toronto-- that, if we want to save life on earth, we are obliged to reduce fossil fuel burn, or at least greenhouse gases, then the Government will be able to congratulate themselves if, tonight, they supported my amendment. By doing so, they will be recognising that
Column 442there are very long lead times in making changes to our energy patterns and in developing from the present inefficient method of electricity production to the more efficient system of combined heat and power.
Rather than defer action now and be forced to take crash measures to meet international standards--which will prove far more costly--the Government should consider more seriously at this stage what will undoubtedly need to be done in future years. My hon. Friend the Minister will undoubtedly acknowledge that combined heat and power is already economic. He may ask why it should need an extra stimulus. Industrial coal generation is taking off in this country--it needs to, as we are bottom of that league also-- because of electricity privatisation. For the first time, it is offering a level playing field.
Large scale city combined heat and power has more self-financing problems. Its rates of return are much more marginal. Schemes in Sheffield, Leicester and Newcastle will have difficulty in making more than a marginal commercial rate of return because of the large up-front capital investment required to lay the infrastructure for hot water mains pipes. When we have them, we will have cheap heat for ever more, but the up-front capital investment is large. That is why there is an argument for this modest incentive.
The Government's case for supporting the nuclear industry and renewals is justified for reasons of diversity, security, the environment, and energy efficiency. But they will be costly. If combined heat and power can be given the modest incentive suggested by the amendment, we will achieve the same objectives, but without the same economic penalty. The marginal increase in the cost of electricity that would result from this amendment will help to provide the necessary capital for developing heat nodes in our cities.
The case for the special slot is overwhelming. For once, the Government could be seen to lead the European Community in providing an incentive, even if we are at the bottom of the league in the development of combined heat and power. By giving that incentive, the Government will also encourage the new technologies that the hon. Member for Rother Valley mentioned. The clean burn coal technologies for the fluidised bed which is adopted by combined heat and power will be helped by the amendment. The major encouragement which that would give to greater energy efficiency and the help that it would provide for a more effective and economic contribution to reducing the greenhouse gases for future generations is overwhelming. I hope that my hon. Friend will respond constructively by accepting the amendment, or at least by saying that he will give the matter further consideration.