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I entirely agree. We need a portfolio approach and the ability to make long-term decisions, based on the fiscal measures that are in place not just for five years but for 10 or 20. The energy suppliers and generatorsthe people who will invest in this technologyneed the security of knowing that they can make those long-term decisions.
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I am pleased that the DTI has recognised that clean coal and related technologies have a role to play, as have the Welsh Assembly Government. But the Minister must recognise the concern from the National Union of Mineworkers, Amicus, Tower and others that the investment in clean coal technology is less than it should be. There should be more. The USA has led the way in this regard, investing significantly in gasification technology and, to a lesser extent, carbon capture. China has undertaken retrofit programmes on several power plants and is experimenting with gasification. My argument to the Minster is that we have a golden opportunity to develop a UK lead in this market and to export our technology worldwideI know that he realises thisbut it could so easily be missed through under-investment.
Andrew Davies, economic development Minister in the Welsh Assembly Government, also recognises this potential in the "Energy Wales" consultation document. He notes that south Wales is a net importer of energy, which is remarkable in the light of my earlier comments on the reserves of good-quality coal in the south Wales coalfield. He said:
"Security of Energy supply requires us to continue to ensure a diversity of fuel supplies which means pressing for the development of cleaner coal operations and the eventual carbon capture for the carbon dioxide emissions of fossil fuelled stations generally."
In Wales, therefore, a review is under way. A coal technical advice note is to be developed for 2006, and there is a will to put in place a demonstration gasification project by 2010. Wales has a key strategic role to play.
The Uskmouth power station in Newport already utilises flue gas desulphurisationFGSand is one of the cleanest plants of its size in the UK, and the necessary consents to fit FGS to Aberthaw have been obtained. Those retrofitted devices are a great improvementthey achieve carbon savings of 15 to 20 per cent.but newer, purpose-built, cleaner plants must be the longer-term solution.
Jessica Morden (Newport, East) (Lab): I recently visited the Uskmouth power station, which is in my constituency, and the company reiterated that they want to develop their use of clean coal technology. But as new technologies are often unproven, banks are unwilling to lend the money and take the risk with new projects. I am sure that my hon. Friend agrees that we should offer more support to industries to prove these technologies in the long run.
On other aspects of technology, one prime example is conversion or pre-combustion technologies such as gasificationturning coal into a gas or liquid that can be cleaned and used as fuel. That is the cleanest of all coal-based electric power technologies, with lower air emissions, solid wastes and waste water. Moreover, it has far higher efficiency, using less coal to produce the same amount of energy, thereby leading to lower CO 2 production. Clearly, that is the way forward.
Concerns have been expressed about the disposal of carbon, yet the technique of carbon capture linked to sequestration appears to have immense potential, which is why BP and its partners started injecting CO 2 last year into the In Salah gas fields in Algeria. The technology exists. In the US, oil producers are paying electricity producers for their CO 2 for that very reason, because it helps them pump out more oil from their oilfields. It is a win-win situation, and BP estimates that reservoirs in the North sea have the capacity to store more than 60 years of the CO 2 produced by all the power stations in Europe.
The Minister will know that one key aspect affecting viability, on which a couple of interventions have touched, is long-term planning, and availability of credits under the EU emissions trading scheme is critical to that. That was discussed in the earlier debates today. Perhaps the Minister will comment on that, and on the much-anticipated report on carbon capture and storage by the intergovernmental panel on climate change.
When the men and women of Tower colliery in south Wales, and their wives and families, took their futures into their own hands and made that pit work, they had to fight against the management, the Government, and against the odds. They were proved right then. They are equally right now. There is a future for coal in Wales and the UK, a future based on economically viable mining, energy security and cutting-edge clean coal technology.
Cwm, Coedely, Brynlliw-Morlais, Blaenant, Treforgan, Penallta, Taff Merthyr, Mardy, Lady Windsorcoal has a great past, but also a great future. It is for us and the Minister, with the support of the coalfield MPs, to carve out that future together.
The Minister for Energy (Malcolm Wicks): I congratulate my hon. Friend the Member for Ogmore (Huw Irranca-Davies) on securing this debate tonight. It is encouraging to have so many hon. Friends behind me, but also slightly scary. It might be an accident of parliamentary timetabling that we have had three debates on energytwo in Westminster Hall and one in the Chamberas well as the climate change debate today. It is not entirely a coincidence, however, that there is a growing interest in energy policy and futures in the United Kingdom. I note that although the Labour Benches are packed, the new alliance on climate change between the Conservatives and the Liberal Democrats is clearly taking place elsewhere. Any suggestion, moreover, that the nationalists have an interest in this issue is also a point that we might want to debate.
My hon. Friend spoke eloquently about his concern at the decline of the coal industry in south Wales, and he spoke enthusiastically about the potential impact of new technologies on the future prospects of the coal
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industry. I want first to address his concern about the present and immediate future of the UK coal industry, and then to look further ahead to the exciting potential role that new technologies can play in making coal a part of a low carbon future.
Currently, there are three deep mines in south Wales. My hon. Friend spoke about the Tower colliery, which employs 375 people and produces some 600,000 tonnes of coal per year. I hope to visit that colliery next week. Work is in progress to re-access viable reserves at Energybuild's Aberpergwm colliery. If this project is successful, the mine should employ some 178 people and produce about 300,000 tonnes of coal per year by 2008. There is also one surviving micro-mine, which is a two-man operation.
Both Tower and Aberpergwm have benefited from coal investment aid. Tower was awarded £2.22 million in application period 1, and as my hon. Friend noted, I announced today that it has been awarded a further £842,000 in application period 2, making a total of more than £3 million. That is a significant sum, and Aberpergwm has also been awarded a total of £3.5 million. These awards will help both mines to meet the cost of investing in projects that are supposed to be completed by the end of next March. However, if progress is slower than expected, payments will continue until the award is exhausted.
The aim of coal investment aid has been to support investment projects in order to maintain access to viable reserves, and to protect mining employment to 2008. Regrettably, at that point Tower is expected to reach the end of its working life, but we hope that the new mining project will progress according to plan. I am advised that it should continue to produce coal and to contribute to local energy needs until at least 2015.
In addition to these deep mines, south Wales currently has seven working surface mines. They employ some 390 people and produced 1.6 million tonnes of coal in 2004. Continuing supplies of coal from both deep and surface mines will be essential in maintaining security of energy supply in south Wales for the foreseeable future. They are particularly important to Aberthaw power station, which remains a vital source of electricity for local domestic and industrial consumers.
My hon. Friend listed a number of locations where coal has been worked in the past, and which may still hold viable reserves, whether for deep or surface mining. Recent changes in the international coal market may help to make them more commercially attractive to potential operators, and it would be good to hear of un-worked reserves being brought into production. For that to happen, they would of course need to meet the terms of planning legislation provisions, in order to ensure that the potential environmental impact of coal working can be managed, or offset, to meet the reasonable concerns of local communities.
I turn now to the future. I share my hon. Friend's enthusiasm for the opportunities that clean coal technologies could provide in respect of the UK's energy mix. Of course, this issue is of wider international note. At the recent EU-China summit, an announcement was made about clean coal technology in China. As colleagues know, given the number of coal stations that
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will be built in the years to come, the role of clean coal technology in China will be crucial if our international environmental climate change objectives are to stand any chance of being met successfully.
It is clear that if these technologies can become competitive in the UK in the next 10 to 15 years, they can contribute successfully to our energy White Paper target of reducing carbon emissions by 60 per cent. by 2050. But of course, we must recognise that even if we successfully develop cleaner coal technologies, it does not necessarily follow that we will use British coal exclusively. Today, coal is an internationally traded commodity, and good quality, competitively priced coal is available from abroad. Thus clean coal technologies are not necessarily the saviour of the British, or indeed the Welsh, coal industry, although I would hope that they would be a significant factor in helping our industry. The key is that British coals need to compete effectively with other sources from abroad.
That said, the key challenge is to develop the technology to deal with the fact that at the moment coal is about twice as polluting as natural gas. How should we go about that? While it should be industry rather than the Government that identifies and brings the most appropriate technologies to market, we also recognise that the Government have an active role to play to stimulate that. That is why I announced back in June the publication of our carbon abatement technology strategy for fossil fuel use. As my hon. Friend mentioned, I also announced a package of some £40 million in capital grants for demonstration projects covering carbon abatement technologies, hydrogen and fuel cells. About £25 million of that has been specifically allocated to demonstrating carbon abatement technologies.
Officials in the Department are currently working up this scheme and we expect to be able to announce more details early next year. In the meanwhile, they are taking forward the other activities identified in the carbon abatement technology strategy, such as the development of a technology road map so that we can focus on those technologies that we need to develop for coal and other hydrocarbons to have a sustainable future.
It is already clear that a number of technologies can be developed to reduce carbon emissions. The most radical solution is carbon dioxide capture and storage, which can reduce emissions by about 85 per cent. For it to be commercially viable, the impact of capture on plant efficiency has to be reducedas do the costswe estimate that it will be some 10 to 15 years before we reach the point at which they will be commercially viable. That is why we are placing short-term emphasis on improving the efficiency of plant.
As well as providing development and demonstration funding, we are also tackling the other barriers blocking the route to market for these technologies. The Chancellor recognised in his Budget statement that CO 2 capture and storage has the potential to reduce carbon emissions from fossil fuels. As part of the climate change programme review, we are investigating what can be done further to incentivise the take-up of those technologies. We are also working with our European
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partners on how to enable CCS to qualify for carbon credits under the emissions trading scheme. All those activities and many more form a work programme that was set out in the carbon abatement technologies strategywork that I expect to lead to an environment that will enable the technology to become a reality.
In the North sea, colleagues will note the BP project in the Miller oil field where it is planned to return carbon dioxide back to the North sea fields, enabling more oil to be produced. In addition, there is the BP work in the Salah gas field in Algeria. Around the world, there are bits of technology and good practice that we can draw on. We are very supportive of all those projects, as their success will provide encouragement for similar projects and lay the foundation for the take-up of new, cleaner fossil technologies.
We have had debates today on coal and energy policy. On a wider note, the House will know that we will shortly be announcing the details of our energy review, as highlighted by my right hon. Friend the Prime Minister in his speech to the Labour party conference in Brighton. My right hon. Friend has said that he wants energy policy recommendations to be made by next year. That shows his emphasis on energy policy, and the
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urgency that he attaches to a range of issues to do with climate change, geopolitical developments, energy supply and other matters.
In addition, my right hon. Friend the Chancellor has announced a review of fiscal measures relating to climate change, and the Department for Environment, Food and Rural Affairs has also initiated a climate change review that will report by the end of the year. That shows that we have in placeor will have in place very soonthe necessary analysis and research that will enable us to think through a variety of difficult issues. That will help us to fulfil our aim of relating our concerns about the planet and climate changesurely the ultimate public goodto our concerns about energy supply, and to the social policy aspects of matters such as fuel poverty.
Within that review process, we must of course look at the future of coal. Therefore, the House will have every opportunity to debate issues that are vital to the people of Wales, Scotland and England, and to the future of energy policy in the UK.
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