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27 Nov 2007 : Column 13WH—continued
There are three considerations when looking at our energy mix. Security of supply is one of the most important considerations for this country. The environmental impact is important, of course, as is the price that we have to pay to develop our strategy. All those issues are interlinked and must carry equal weight. So how does coal stack up against the three criteria? The UK has a large supply of cheap coal, and could be self-sufficient—and therefore secure—in it. We are certainly the envy of many of our European
partners, of which only Germany and Poland produce more coal each year than the UK. That will change because Germany is moving toward zero coal production by 2010. That mistake is, I believe, based on the fact that it has agreements with Russia, about which I have great concerns.
Mr. Cash: One of my gravest concerns during debates and meetings about coal with Lord Heseltine was that at that time, Germany was receiving authorised Commission subsidies of £4 billion a year and we were receiving none, which created a complete imbalance in generation. When privatisation took place, the consequence was to reduce the critical mass to a point at which privatisation was scarcely able to get off the ground properly.
Mr. Hamilton: The hon. Gentleman makes a valid point and he covered the issue in detail in his speech. Indeed, I shall omit a substantial amount of my speech because I do not want to cover that ground again; I am also mindful that other Members want to speak.
Security of supply is important. According to the Government’s 2006 energy review, the UK has around 142 million tonnes of coal in identified surface and deep mines, and at present levels there will be 70 million tonnes left in 2020—a point clearly made by the hon. Member for Stone. The UK has 190 billion tonnes of coal, and we are the envy of most European countries. It is incumbent on us to deliver a strategy to develop clean coal technology.
The UK has a large supply of coal that could assist in providing a long-term solution. More importantly, it has a supply big enough to make public and commercial investment viable. So why did the UK become an importer of coal? Why is it still an importer of coal when coal has doubled in price since 2003? The reason is that the UK has one of the most liberalised energy markets in the world, and we take the price today without considering what we will do in future. It is disappointing that we continue to move the energy debate further away. The first and foremost issue for debate is security of supply, before we go into the details of one form of energy versus another. I do not want to go into those details, and I try to avoid the obvious disagreements that may develop regarding wind power, nuclear power and so on. There is room on the table for all processes, and we must remember to consider the next century going forward.
The UK was forced, in my opinion, to import coal, and the hon. Member for Stone referred to the carbon footprint that results from coal being transported to this country. The Government now have an opportunity. The increased price of gas and higher demand from the developing economies of India and China mean that we cannot rely on an everlasting supply of cheap, imported gas.
China, which is building two new coal-fired power stations a day, is probably the best example. It has 30,000 collieries—not 30,000 miners—but there is a price to pay, and what it is doing is completely wrong. There have been 6,000 deaths in the mining industry, which is an indication of how cheaply the Chinese value life. There are far better ways of extracting coal. One colliery has 10,000 miners, which is phenomenal.
By 2030, coal consumption will have increased by 230 per cent. from 2004 levels in China alone. That is the real world, and we must consider clean coal technology. We must not fail to develop it, and to buy into it when it has been developed elsewhere. Our problem is that China and India are the engine houses of the world, and America is beginning to expand its coal industry. They will determine the worldwide price of coal, so it is important for us to have self-determination.
The supply of oil and gas remains volatile, and Russia and Iran hold more than half the world’s gas supply. Oil is concentrated in a few countries, many of which are in the middle east. That leaves the UK vulnerable over the next decade and beyond. We must secure a supply of energy and start to realise that coal is a major part of our energy mix. The question is not, “Does Britain need coal?” The energy market is demanding the use of coal, so the questions is, “Would we be better off producing coal in Britain, rather than paying the market price for it?” Given that coal must be part of our long-term strategy, how can we make it more efficient and environmentally friendly?
In other words, the attraction of coal is supply and price, but environmentalism is an urgent issue. Everyone says that open-cast mining is terrible, but the same people are against windmills and other forward-looking technology. We must look at the bigger picture. If development is necessary, planning issues must be addressed and changes made. That also applies in Scotland, where the Scottish Parliament controls planning issues. If planning approaches in the UK can be relaxed to develop a strategy to secure energy supply, such development must also take place in Scotland.
I was delighted when the Prime Minister announced during his speech to the World Wildlife Fund on 19 November that the Government are launching a competition to build the world’s first commercial carbon capture storage coal project. It is hoped that that will demonstrate the possibility of CO2 capture, transport and storage. I confess that I was surprised but delighted that he also said:
“We will also consider whether, if we can show that carbon capture and storage is technologically and commercially viable, it should be made mandatory in some form for all new British fossil fuel plants.”
It is becoming clear that coal is again important to the UK energy mix. The increasing price and instability of imported fuels is leading the energy market to turn to coal, and the Government are finally making progress in dealing with coal’s environmental impact. The next stage of the process must be to look at how our coal reserves can be used. The UK has just eight working mines, none of which is in Scotland. If the Government are committed to a new generation of coal stations, working with carbon capture and storage, they will send a clear signal that investment in mining is commercially viable.
I turn to geothermal heating, which has not been referred to. I want to plug the fact that Midlothian is building 5,000 new houses with geothermal water from the Monktonhall workings. With a small investment, we could develop a strategy for the first geothermal
heating project in the UK. The Prime Minister said that he wanted five new settlements throughout the UK and to make them environmentally friendly. I suggest that he choose Midlothian as a Scottish example, with its geothermal heating, because that is a good example of history helping the future of coal extraction.
Our country is at a crossroads. When we have the energy debate in the House, Members will have to make probably the most important decision that we will ever have to make, apart from on war. It will affect the survival of our country as a world economic power. I support what the hon. Member for Stone said, and I hope that the debate takes place sooner rather than later.
10.28 am
Mr. John Grogan (Selby) (Lab): It gives me pleasure to make a concise contribution to this debate, following the thoughtful contribution from my hon. Friend the Member for Midlothian (Mr. Hamilton). The hon. Member for Stone (Mr. Cash) spoke with typical passion. I am glad to see the Minister in his place, but I am disappointed that he is not supported by a Whip. It will give me no pleasure to write a stern letter to the Chief Whip asking for an explanation.
The hon. Member for Stone said that we still have a share of the market, with 20 million tonnes of indigenous coal. It is interesting to look at what happened over the past year. When the Selby complex closed, coal was about £21 a tonne. That has almost tripled, and on the spot market in Rotterdam it is £100 a tonne. That has had an impact on some of the eight mines that my hon. Friend the Member for Midlothian mentioned. The dominant producer is still UK Coal, and a year ago the question was whether the generators would renegotiate the contracts with UK Coal. Those contracts were set in stone when prices were much lower. It is good news that, partly through the influence of the coal forum, both E.ON and EDF Energy have signed much improved contracts with UK Coal in the past couple of months. Kellingley, the one remaining mine in my constituency, which employs 700 men—it is the second biggest mine in the country—is still waiting for its contract with Drax to be renegotiated. Even so, with the prospect of the Beeston seam coming on stream, UK Coal is recruiting extra staff. There is also the prospect that the mine at Hatfield, which is just down the road, will be reopened shortly, with 300 jobs becoming available.
With that, my time is up, but I want to say just two final things on the point that my hon. Friend the Member for Midlothian made about safety. Surely to goodness, one thing that we in this country can do is export our good safety record. We should be doing more to pass on our expertise not only to China, but to places such as Ukraine, where there was recently a terrible number of deaths. Surely to goodness, the coal forum, and even the Department for International Development, can look at the expertise of the Mines Rescue Service and the safety culture of British mines.
10.30 am
Martin Horwood (Cheltenham) (LD):
I congratulate the hon. Member for Stone (Mr. Cash) on securing a debate on such an important subject, and it is always a
pleasure to follow the hon. Member for Selby (Mr. Grogan), even though he was unfairly constrained by the clock.
Clearly, this is an important issue. I do not agree with everything that the hon. Member for Stone said in his opening remarks, but I do agree about the need to ensure that the UK’s energy supply is safe and secure. However, my emphasis would be rather more on the environmental need for action, particularly in the light of the fourth assessment report by the intergovernmental panel on climate change, which, if anything, shows that the science is becoming more worrying and the need for action more urgent. Fossil fuels meet 90 per cent. of UK energy needs, so we must tackle the contribution that such fuels make to our carbon emissions.
It is tempting to find the solution to energy supply problems in certain fossil fuels, given that oil and gas supplies will be exhausted at some point, while there is an abundance of coal worldwide and a relative abundance of it even in the UK. However, coal is undoubtedly dirty, with 30 per cent. of this country’s CO2 emissions and hundreds of millions of tonnes of carbon coming from electricity generation.
What should be our response? There are several priorities that we should put before the development of clean coal technologies—I shall return to them—but the first priority must be energy efficiency. There is huge potential for reducing the demand for energy at household level through things such as smart meters. In the housing sector, the Government are now finally going some way towards setting a target of zero carbon emissions for new-build houses. However, they have not so far addressed the urgent need to look at the existing housing stock, even though the majority of the houses that will exist in 2050 have already been built. More therefore needs to be done on that front.
The second strategy must be to promote this country’s renewable energy sector, which is fast expanding, but which is still far too small. It is shameful that we are so far down the European league table when we have such enormous potential. On the large scale, we have onshore wind, which the British Wind Energy Association reckons could supply 6,000 MW by 2010, with 3,500 turbines, or 50 per cent. more than was previously imagined was viable.
Contrary to what the hon. Member for Stone said, the Carbon Trust, whose work I trust, is clear that onshore wind is currently an economically viable technology and a perfectly reliable part of the energy mix, and we should expand it. Let me take this opportunity to congratulate the trust on its new partnership for renewables, under which it is seeking to release public sector land for renewable energy programmes. The project might well support an even greater increase in the use of onshore wind at no cost to local authorities, and that valuable initiative is exactly the kind of thing that we should promote.
Mr. Hamilton: May I point out to the hon. Gentleman that the Select Committee on Scottish Affairs took evidence from Scottish Power on this issue two years ago? The company was asked, “Would you be building wind turbines if there was no subsidy,” and it finally had to answer, “No, we would not be developing this strategy if there was no subsidy.” My point, of course, is that we must have subsidies before we can develop such a strategy.
Martin Horwood: It is a good point. The Carbon Trust’s analysis shows that, although many renewable technologies need support initially, they can become viable over time, and onshore wind and geothermal energy are now virtually completely commercially viable.
Offshore wind has even greater potential. The British Wind Energy Association reckons that offshore wind may produce 10,000 MW by 2017, and that could be increased if we exploit the full potential of the ambitious plans to put a gigantic wind farm in the North sea.
We have geothermal energy, and the hon. Member for Midlothian (Mr. Hamilton) suggested Midlothian as place where it might be developed, but there are plenty of others, including relatively hot, dry potential sites in south-west England. There are already commercially viable ground source heat pumps from companies such as Geothermal International. Gloucestershire’s new police headquarters is heated using a commercial ground source heat pump, as is the Chelsea building society’s new call centre in my constituency.
We have solar photovoltaic technology, which has rather been the Cinderella of the renewable energy sector because it is relatively expensive, but it still has great potential in terms of carbon reduction. If the cost issues can be dealt with, solar photovoltaics will have great potential, and such output is increasing by huge percentages each year.
We also have tidal flow technology, wave power, tidal barrages and lagoons. Liverpool bay could contribute 1,500 MW, and the Severn estuary could contribute 4,500 MW. All these things could combine to provide at least 10 per cent. of the UK’s energy capacity.
Providing that we can get over the challenge of ensuring that biofuels are absolutely sustainable by introducing a proper certification system as soon as possible, biofuels and biomass will also certainly have a major role to play.
On the large scale, therefore, we have a burgeoning variety of renewable energy sources. The hon. Member for Stone mentioned what he called the Danish problem: if we rely on one renewable energy source that turns out to be intermittent, we may encourage less energy-efficient, more carbon-inefficient technologies. However, that can be dealt with by having a diversity of supply, and I have discussed the issue with National Grid, which is confident that we can do well if we develop a variety of renewable sources. Household microgeneration and heat generation, as well as combined heat and power and community-based renewable sources, can add to that diversity.
The challenge is to reduce carbon emissions, in the Government’s terms, by 60 per cent. by 2050, although the Liberal Democrats would go even further and aim for 100 per cent. clean-technology generation by 2050. Unfortunately, that will require some transitional technologies, and the question is which ones. Obviously, one option is nuclear, but that is unpopular. According to a Parliamentary Office of Science and Technology survey, three quarters of respondents expressed a preference for renewable over nuclear. I think that nuclear is immoral.
John Robertson: I have heard all this before. Why does it have to be a contest between renewables and nuclear for the Liberal party? Why can we not have a debate in which the needs of the nation come first?
Martin Horwood: The needs of the nation will last for thousands of years in various forms. One of the most immoral things about nuclear power is that it bequeaths a dangerous legacy to generations so far into the future that we have no idea how they will be able to respond. Nuclear is not a clean technology; nor is it particularly secure, because it depends on an imported fuel—uranium. The first of the new generation of nuclear power stations will also be too late to help with much of the energy gap, because they are unlikely, on the most optimistic scenario, to generate power before 2017.
The transitional technology that I favour is clean coal, with carbon capture and storage. The storage problems are equivalent to those of nuclear, but clean coal has many advantages over nuclear. Gas and coal-fired power stations are more flexible than nuclear power stations, which is an advantage in terms of the reliability and flexibility of supply. Nuclear waste is also far more dangerous than CO2, which can be injected into oilfields and gas fields. Not only would our supply of energy be more secure, but we would probably have a competitive advantage, in that we have unique expertise in such technology from our experience in the North sea.
The Government have given out mixed signals. I agree with the criticism of the competition approach. It is very regrettable that the Peterhead project—which has been referred to, which could have been on line by 2010, extracting CO2 from natural gas and pumping it into the Miller oilfield and on which BP has already spent £50 million—effectively had the rug pulled from under it by the Government’s competition initiative. There has been a lot of criticism from Centrica, BP and others about that.
The Government have, however, made positive initiatives too, and I join the hon. Member for Stone in welcoming the near-zero carbon initiative. It is a positive step, but it is a shame in a sense that it will be developed with China, when we could have developed something entirely home grown at Peterhead. Nevertheless, where the Government take their foot off the brake and keep it on the accelerator, they will have our support on carbon capture and storage. The long-term vision is one of avoiding fossil fuels and dangerous waste altogether and of all our energy needs one day being met from renewable sources.
10.41 am
Mr. Mark Prisk (Hertford and Stortford) (Con): I welcome you to the Chair, Mr. Amess, and congratulate you on your remarkable and impressive impression of a Government Whip. I suspect that they are busy looking for CDs somewhere.
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