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27 Nov 2007 : Column 7WH—continued

Mr. Crabb: My hon. Friend is being generous in giving way. He should be aware that the Aberthaw project on the retrofitting of clean coal technology is
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not even a demonstrative project; it is being called a pilot project. It is a small, 1 MW facility to test the infrastructure to see whether it could ever be developed into a commercially viable and usable bit of kit. That returns me to my earlier point that we as a nation should have been moving towards clean coal technology a lot faster. I fear that, even if the Aberthaw project eventually proves viable, it will come too late in the day, by which time more and more gas power stations will have been built to plug the energy gap in the next 10 years that my hon. Friend has so eloquently identified.

Mr. Cash: I am grateful to my hon. Friend, and that is an extremely good point. We are in a catch-up position, but there is an opportunity to do that. I have optimism and hope that the Government will take these points on board.

Mining experts estimate that it would cost hundreds of millions of pounds to sink a new shaft and commence mining operations at a new site, but the Government must seek to support those who are considering new and expanded mining operations. Given the new clean coal technologies that I have highlighted and the energy capacity crunch that the UK will soon face, I believe firmly that we must maximise our indigenous reserves of coal. On that point, will the Minister address the guidance in minerals policy 3, which is a major hindrance to open-cast miners who wish to exploit the substantial coal reserves that lie close to the surface?

Mr. David Hamilton (Midlothian) (Lab): Does the hon. Gentleman accept that a combination of open-cast and deep mining is extremely important for the future? We could have the situation that we have had in Scotland for a number of years. Open-cast can lead to drift mines; that, in turn, means that investment in open-cast can be combined with investment in drift mines, which can take us underground.

Mr. Cash: I do accept that. Part of the usefulness of this debate is to demonstrate the need for balance in all directions, even within the coal industry. I was about to say that huge coal deposits can be extracted from open-cast mines, but MP3 is the problem. Will the Minister tell me whether mining operations in general will be covered in the Planning Bill? Why is he not prepared to issue a statement of need of at least 20 million tonnes of domestic coal output, as called for by the Government’s own coal forum?

The renewables obligation is the Government’s principal policy instrument to encourage the development of the renewable electricity sector. It is an indirect subsidy system drawing funds from consumer bills and passing them to renewable electricity generators. That currently amounts to £1 billion a year and will have totalled £32 billion by the end of the scheme. In light of the fact that renewable energies such as wind are intermittent and do not provide base load energy, would some of the substantial moneys that go to wind power, which is the major beneficiary, not be better spent on projects such as clean coal? This is a major issue in my constituency, as there are projects for wind turbines near Maer hills and Norton in Hales, which we shall vigorously oppose.

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Martin Horwood (Cheltenham) (LD): Will the hon. Gentleman give way?

Mr. Cash: In a moment. The clear benefits of clean coal would be increased reliability of supply and cheaper electricity prices for the consumer. Before I give way to the hon. Gentleman, I should point out that it is well established that the idea of wind farm projects in the midlands area is very counter-productive.

Martin Horwood: The hon. Gentleman has joined a number of Conservative Back Benchers and councils in opposing wind power, but it has to be a vital part of our future energy mix. On what basis does he oppose wind farms?

Mr. Cash: Frankly, they just do not work and are over-subsidised. I have not come here to talk exclusively about wind and wind farms, but I can tell the hon. Gentleman that there is a great deal of opposition in my constituency to the non-productive use of such technologies, which are completely useless according to the evidence that we have received. I am talking specifically about the midlands; it is not for me to go into the broader picture in this debate, but I treat the whole issue of wind farms with a great deal of scepticism and I think that they are extremely damaging environmentally.

Clean coal should enjoy financial incentives equal to those enjoyed by the renewable energy sector, and nor should the subsidies that have gone to nuclear power be forgotten. Will the Minister address this specific point in his response?

I should like to give a brief but important example of how over-zealous support for renewables, particularly wind power, has led to increased carbon emissions. Denmark has the most intense concentration of wind generation in Europe. At peak output, its wind farms can account for nearly 64 per cent. of Danish peak power, but that rarely occurs. Last year, Danish carbon emissions rose as the Danish grid fell back on older, coal-fired power stations to plug the energy gap left by underperforming wind farms. Its power stations used 50 per cent. more coal than in 2005 to cover the failings of wind power, and its wind turbines generated a mere 22 per cent. of electricity, down from 29 per cent. in 2005. The increased demand for coal and the fact that it was burned in old, unmodified stations meant that Danish carbon emissions rose by 36 per cent. in 2006. My point is obvious, and I suspect that Danish investment in clean coal is imminent.

Investing in clean coal technology could allow us to enjoy consistent and competitively priced base load supply, with huge reductions in carbon emissions. Overzealous and irresponsible support for renewables, no matter how well-meaning, can and will lead to what is increasingly called “the Danish problem”. There are considerable financial incentives and support for renewable energy sources, but no such moneys exist to assist and promote ongoing indigenous mining projects, which are crucial if we are to retain and develop our coal reserves and have a clean coal generating sector that does not depend only on coal imports.

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The recent surge in coal prices has whetted the appetite of indigenous coal producers who wish further to develop reserves. Loan guarantees would rightly provide an alternative to direct subsidy and could reflect the Government’s strategic support in the national interest. The money could be used to access new reserves and to help develop existing reserves. Developing new coal faces underground can take years, and considerable finance is required. A facility for Government loans or loan agreements would resolve that issue and secure access to coal reserves that require large-scale, ongoing investment. Harworth colliery, in Nottinghamshire, has been mothballed because money cannot be found to access the 50 million tonnes of coal that could be mined there and sold to power stations literally on its doorstep in the Trent valley. Will the Minister address the issue of loan agreements as one concept for the financing of mining operations in the national energy interest?

The nature of a loan is that the money is returned to the lender—in this case, when the coal mined as a result of the loan has been sold to the generators. Coal is the world’s most abundant fossil fuel. According to the International Energy Agency, in the light of new clean coal technology the use of coal is set to grow, especially in the developing economies of China and India and in countries such as the United States and Australia. It is therefore imperative that we use this national asset, as so many other countries are doing. In doing so, we can demonstrate how it can be used in a balanced and environmentally responsible way by supporting the concept of clean coal technology with action, not just words.

It is imperative that the Government provide a lead on energy policy. The Minister might disagree, but many in the energy sector and in this House are not aware that a policy with set targets or ambitions to address these critical questions exists. I look forward to his responses to my points.

Several hon. Members rose

Mr. David Amess (in the Chair): Order. The winding-up speeches will start at 10.30 am. I have no power to impose a time limit on speeches, but I would like to call everyone to speak, so I appeal to hon. Members to share the time out.

10.6 am

John Robertson (Glasgow, North-West) (Lab): I congratulate the hon. Member for Stone (Mr. Cash) on securing the debate. He has proven once again that he speaks well on not only Europe; he has given good speeches on energy—on coal today—and on water in Africa in previous debates.

The UK has billions of tonnes of coal, which we might need to use one day. It would be foolish to write off that coal completely and have the dash for gas that has been described. As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said in an intervention, we might end up with a span of three years in which we have to go to gas and might therefore build new gas power stations that will not meet our need to reduce carbon dioxide emissions.

I firmly believe that we should all try to reduce our use of oil and gas. They are finite resources, and if we
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are serious about securing a clean, sustainable supply of energy for future generations, we must act now. I am particularly disappointed by the Government announcement that we will be into the new year before we hear what will happen with the energy Bill and the Government’s policy on it. It was supposed to be dealt with before Christmas, but it seems to be being put back and back. That time could be used to deal with this country’s needs. If we keep putting these matters back, we will certainly end up with a dash for gas.

Angus Robertson (Moray) (SNP): Does the hon. Gentleman share my disappointment that the Peterhead project has been put back? Does he agree that it offers a tremendous opportunity and that the Government should stop dithering on it, so that it is delivered?

John Robertson: Yes, I am disappointed, but I am also disappointed by many things that are happening in Scotland on energy. Perhaps the hon. Gentleman could influence some of his colleagues north of the border to open their eyes and consider the wider possibilities of energy there and the needs of not only the Scottish people, but people in the UK and, possibly, beyond in places where we could sell that energy.

Angus Robertson: On having a wider influence in the energy market, does the hon. Gentleman welcome the Scottish Government’s initiative for a super grid in the North sea? That would help to link Norway and Scotland and do exactly what he is promoting—get energy that we produce into the wider market.

John Robertson: I accept what the hon. Gentleman says, but the caveat is that he assumes that the grid will give Scotland access to Norway. If we keep to our present energy policy, Scotland will be taking energy from Norway. That is why we quickly have to make a decision now and go forward.

There are huge opportunities for coal on the international market if we develop clean coal technology and carbon sequestration. It is estimated that the use of coal will rise by 32 per cent. by 2015 and by 59 per cent. by 2030. The International Energy Agency forecasts that coal will retain a quarter share of the world’s energy mix.

When we talk about coal, it is important to consider China. Coal is still the great fuel in China, where it is used in everything from power stations to the samovars for heating water on trains. The answer to China’s fuel needs is to go back to the past. China’s future fuel will still be coal.

Coal has a bad reputation: dirty, dangerous and highly polluting. The prospect of a coal-powered future may fill many with dread. China is already by far the world’s biggest producer and consumer of coal. Its 30,000-odd mines churned out more than 2 billion tonnes of the stuff last year. That is more than a third of all the coal produced in the world. The mines also cost the lives of 6,000 Chinese miners. Coal is the main reason why China is now second only to the US in the output of greenhouse gases and is soon to overtake the US.

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Coal’s dirty reputation may be about to change, however. China has given the go-ahead for the construction of several huge new projects to turn dirty coal into clean gas. A company not far from my constituency, Babcock, is one of the leading lights in the technology. I hope that we do not allow another country to get ahead of us by taking the technology in which we were once the experts and cashing in on it in the future. It is important that we as a country get behind coal gasification. We have understood for years that it is one way to make money for this country.

With oil prices now more than $90 a barrel, it has finally become profitable to use coal again, but we have to build multi-billion-dollar plants to be able to use it and to reduce carbon dioxide emissions to the levels that will be acceptable in the future.

Mr. Cash: I am sure that the hon. Gentleman would agree that it would not be a terribly good idea if we went for gasification and it led to a forest of derricks. In other words, there is a way to draw gas without environmental disruption.

John Robertson: The hon. Gentleman is right, but that technology is still a long way down the road. Unfortunately, our needs are now and not in the future. We should never throw the baby out with the bath water. We must consider everything and exclude nothing.

According to the experts, the new mega-plants will take dirty, sulphur-rich coal and turn it into clean, sulphur-free gases, such as methane, which will be ready to be liquefied and put into the tanks of China’s millions of cars or burned it its power stations.

On energy policy, it is no surprise that I, as the chairman of the all-party group on nuclear energy, support a fully balanced energy policy. I am concerned that we may miss opportunities by delaying decisions to allow the private sector to build nuclear power plants. We may end up depending on gas for the vast majority of our energy sources. If China is on the road to investing in clean coal technology, why are we not? The Chinese have announced £10 billion of investment in renewable energy; therefore, why can we not do so?

Reducing the use of oil and gas is a sensible option. Any further delay will only increase our dependence on foreign gas. The hon. Gentleman identified in great detail the problems in respect of not just energy, but national security.

I hope that the Minister will indicate how the Government view the situation. I believe that China can be an example, not a threat. We must consider why it is investing money in new coal technologies, and why it has entered into a $20 billion agreement with a French company, Areva, to build six new power stations, while we dither and wonder what to do with our energy policy. It is important that we get the matter sorted out quickly.

10.15 am

Mr. David Hamilton (Midlothian) (Lab): I congratulate the hon. Member for Stone (Mr. Cash) on securing this important debate. I am still trying to visualise him telling off Heseltine and Scargill at the same time. I remember that during that difficult period one or two
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lone voices in the Conservative ranks argued for the coal industry in the long term, and I congratulate him on that. He has a long history in respect of the coal industry.

Coal is a big issue. We should be considering what is in front of us and what we need to do to address the big problems that face this nation. I am the chairman of the all-party group on coalfield communities, having taken over from my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham). The term that I think of every time that we talk about coal is “dirty coal”. “Clean coal” is often described as a contradiction in terms because coal is seen as dirty, inefficient and heavily polluting.

The environmental group Greenpeace has waged war against the possibility of any new coal-fired power station. Last week, it was already attacking the possibility of our going ahead, and it says that it will climb all over any such planning permission. It has done that before on many occasions and will, I imagine, continue to do so. It points out that the last new such power station was built in 1974, and that coal is the least environmentally friendly way of producing energy. Its website states:

I agree with that, and that is what we are discussing in this debate.

I also agree that if the technology and efficiency of coal had been static since the last power station was built in 1974, we would not be having this debate. When we promote the coal industry, we are promoting not the technology used by previous or even existing plants, but the technology that we hope will be developed in the future. We are talking about the possibilities of new and dynamic technologies through which coal is crushed and washed to remove sulphur, through which it can be burnt in modern, efficient power stations and co-fired with biomass, and through which carbon is captured during production. Conventional coal production could release as much as 0.9 million tonnes of carbon dioxide each year in order to create 500 MW of electricity. That is nearly three times as much as gas—that point was made earlier—which is too much.

If that were the only way to burn coal, yes, coal would be a useless resource. However, with improved efficiency, CO2 emissions can be reduced from 0.9 million tonnes to just 0.69 million tonnes. Through combined biomass, they can be reduced to 0.6 million tonnes. Through carbon capture and storage, emissions from coal-fired power stations can be reduced by around 90 per cent. to less than 0.1 million tonnes of CO2, making coal cleaner than other traditional forms of energy production. We are promoting a modern, clean and efficient form of energy production.

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