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Mr. Alex Salmond (Banff and Buchan) (SNP): I suspect that I am one of the few hon. Members who has driven a hydrogen fuel cell car, thanks to siGEN Ltd, which is based near Aberdeen airport.

Does the hon. Gentleman agree that many companies that are involved in such technology argue that the Government require a clear strategy for deployment? Although a massive amount of research is taking place elsewhere in the world, especially in the United States, the opportunity that rural Scotland offers, with massive energy resources but an inability to get them to the point of use, could be addressed by a Government strategy on deployment.

Mr. Carmichael: The hon. Gentleman makes a powerful point with which I would not argue. The potential exists for the development of commercial applications of hydrogen technology. The simple truth is that if we do not do it, we will end up buying in work that has been done elsewhere in the world because, as I   shall explain, other people are pushing the agenda. If we do not get our act together soon, we will miss the opportunity.

I caution the hon. Gentleman against boasting about being the only hon. Member to have driven a hydrogen fuel cell car. He would be astonished by the number of people who told me in the past half hour that they must be one of the few in the House to have driven hydrogen cars.

About €100 million of EU funding, matched by an equivalent amount of private investment, is being awarded to research and hydrogen and fuel cell demonstration projects after the first call for proposals by the sixth EU research framework programme. That will be reinforced via further calls for research and development proposals worth a public and private investment of €300 million, of which EU funding is €150 million.

Those projects represent the initial phase and form a basis for the large-scale "Quick Start" initiative for hydrogen production and use, which is being launched jointly by Vice-President de Palacio and Commissioner Busquin. The European growth initiative earmarks an indicative €2.8 billion public and private funding for those partnerships over the next 10 years.

The Government of Iceland, whose electricity is almost entirely derived from geothermal and hydro power, aim to become the world's first hydrogen economy, through a multi-million dollar partnership to convert Iceland's buses, cars and boats to the fuel over the next 30 years, exporting the rest to Europe. Following Iceland's lead, the Pacific island of Vanuatu has outlined its vision for a 100 per cent. hydrogen economy by 2010, based on renewable energy. Hawaii, rich in both solar and geothermal resources, recently established a public-private partnership to promote hydrogen in the island's energy economy, possibly
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exporting the excess to California. Surely, somewhere between Vanuatu and Hawaii on the one hand and Iceland on the other, there must be opportunities for Orkney and Shetland to find a place to fit in.

Compared with countries such as the United States, Canada, Germany and Japan, the UK Government's commitment to developing a hydrogen economy has so far been lukewarm and public investment has been minimal. Quite simply, we are behind other countries in developing a hydrogen economy.

Over the next 20 years, the world's largest economies—the USA, Japan and Europe—are committed to investing billions of pounds of public and private finance in hydrogen development. The Minister will be aware that BMW, for example, has already invested hundreds of millions of euros in the development of hydrogen cars and said recently that it would focus further support on parts of Europe where there has been a demonstrable commitment to providing the infrastructure to fuel its cars. All players in the public and private sectors agree that it is vital to establish demonstration projects and

A coherent Government strategy is vital to my constituency. The Minister is, I hope, aware of the vast   potential for renewable energy production in the   northern isles. We feel that there is a genuine opportunity for the peripheral parts of the UK to be at the forefront of a new way of developing and distributing energy.

The PURE project, of which I have already spoken, has shown a great deal of dynamism. Its recently published feasibility report on a hydrogen test energy study centre in Shetland shows just how carefully local people are assessing how we can best maximise these opportunities. If the Department could show the same dynamism as a community the size of Unst, our hydrogen economy would be in a much healthier state.

The Minister has no doubt heard me speak before on the problems caused by the lack of an interconnector to the national grid from Shetland. At best, that situation will not change for at least a further eight years, but that constraint provides the rationale during this time for focusing on developing renewables-to-hydrogen pilot, demonstration and research schemes, which can create a significant number of quality jobs.

Hydrogen technology can also help to overcome the intermittency of some renewable energy sources. It is often argued that wind turbines cannot be relied on to provide a significant proportion of our energy because it is not always windy. Some in my constituency might dispute that assertion, but hydrogen technology none the less enables energy to be stored and released when renewable energy supplies are lower.

The development of the PURE project has been the subject of considerable public consultation and public awareness raising in Unst and Shetland as a whole. Generally, the reaction has been favourable. The project demonstrates the production of hydrogen from wind power, the storage of wind power in the form of hydrogen, the conversion of stored hydrogen back to
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electricity available on demand and the use of hydrogen as an automotive fuel for a car converted to run on hydrogen by a Shetland graduate.

Lembit Öpik (Montgomeryshire) (LD): I applaud my hon. Friend for taking such an insightful look into the future of energy production, but does he agree that this could solve many of our problems with aviation pollution? Although the technology may not yet be fully developed, it seems likely that we will be able to power aircraft with hydrogen technology, which would bring benefits to the Orkneys, as well as to other places, which could be leading on this.

Mr. Carmichael: My hon. Friend will be aware of the impact of the increased use of aviation fuel in recent years on our ability to meet carbon dioxide targets. His point about using hydrogen for aviation is perhaps real blue-skies work, in every sense of the term, but every journey starts with the smallest step and we will never get there if we do not do the work on the other aspects that I have referred to.

On the commercial front, Shetland Composites collaborated with BOC, BP and siGEN, to which the hon. Member for Banff and Buchan (Mr. Salmond) referred, to design and build an eco-marathon car fitted with a fuel cell installed by Ross Gazey. This project was largely privately financed.

At the same time, two intermediate-sized commercial projects, involving the establishment of renewable energy-powered hydrogen production systems, sized at several megawatts, are currently being discussed by Shetland Islands council. Those are large, well-resourced projects. Over the past year, young Shetland graduates Ross Gazey and David Sutherland have been involved in most of the principal hydrogen fuel cell installations in the UK: Tees valley, HARI at Loughborough, AMEC in Aberdeen, and most recently, the Trafalgar square Christmas tree lights.

I have dwelt at some length on the various local projects in Shetland. I have done so because I wish to highlight to the Minister the enthusiasm in the communities. His predecessor was good at visiting Shetland, and I hope that he will find time to visit the constituency, too. Energy, be it hydrocarbons or renewables through wind and wave generation, is of supreme importance to us, and the role of the Energy Minister is keenly followed in the northern isles.

For us and other rural areas to take full advantage of the investment opportunities arising out of local hydrogen projects, there is a need for a clear political commitment in the United Kingdom and a corresponding commitment to public investment in it. The reason that we seek the UK Government's commitment now to the future development of a hydrogen economy is that, in combination with their existing commitment to renewable energy, they can acquire ownership over the production and supply of all their future energy needs.

The potential for community ownership is perhaps most potent, particularly in the isles. The Minister will have heard me speak previously on the subject of petrol prices in the isles, where we routinely pay 10p to 15p per litre more than the rest of the country for petrol and diesel. If we can produce hydrogen as an automotive
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fuel, and if we do that from our renewable resources, we will no longer be at the mercy of oil companies, distributors and others who take their cut, resulting in us paying so much extra.

I hope that the Government have given serious consideration to the January report. There is still a need for the Department of Trade and Industry to raise its game in this area. The exceptional work being done by the Unst partnership has the potential to produce a secure supply of clean energy, but that will be realised only if the Government establish a clear and effective framework in which the industry can flourish.

11.7 pm

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