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Lord Ezra: My Lords, can the Minister enlighten the House on another review; namely, the review of
regulation which was due to be published before the end of last year? Will it be published soon, because it, too, has a bearing on the issue?
Lord Haskel: My Lords, I shall write to the noble Lord about that. I am not sure of the position of the review, but I know that it is well advanced.
My noble friend Lord Hardy was concerned about the depletion of our sources of gas, as were other noble Lords. Simple extrapolation from current production and estimates of reserves is notoriously unreliable, rather like the forests, since both our figures change over time. For example, remaining discovered reserves of UK gas are about 25 per cent. higher than was the case in 1980, even though production since that time has been equivalent to half of that 1980 figure. Although production has tended to increase, the discovery of new reserves has generally matched the increases such that the ratio of reserves to production has not changed much. Published reserve figures do not include anything for oil or gas which is yet to be found.
The noble Lord, Lord Hardy, is right to say that gas being found on the UK Continental Shelf is in smaller fields. The advance of technology and the infrastructure already in place have meant that those smaller fields can be exploited at a cost which is not expected to affect significantly the final price of gas.
Concern was expressed about imported gas and the unreliable sources of supply. It would be mere speculation to worry about where supplies might come from in 10 or 20 years' time. Security of supply will be a prime commercial concern to gas suppliers who will take whatever steps are necessary to ensure that. But Russia has provided a very reliable gas supply to several European countries. Our nearest large potential supplier is Norway, with which we already have pipeline links. The world gas market is still developing and may well become as open and competitive as that of oil.
I turn to the question of gas power station consents. The noble Earl, Lord Courtown, raised that matter. I shall have to write to him about the specific power station which he mentioned. The matter of tonnes equivalent of coal is quite complicated. We do not have the figures. It will depend on the assumption in relation to which coal stations might be displaced and how often they would otherwise have been running. Rough estimates could be made, but I shall write to the noble Earl about that.
He asked also about future power stations. The Secretary of State for Trade and Industry will consider reasoned requests for exceptions to be made in particular cases and in doing so, she will be mindful of the environmental and other benefits of combined heat and power. But I should make the point that of the five stations consented to by the present Government, which had previously been consented to in principle, three were industrial combined heat and power schemes and the fourth involved a significant combined heat and power element.
The noble Lords, Lord Ezra and Lord Gray, spoke about CO 2 emissions. All forms of fossil fuel energy emit carbon dioxide which is a major contributor to
global warming. The noble Lord, Lord Ezra, made the important point that improving efficiency in the electricity sector is one relatively simple way in which to reduce emissions. Fortuitously, the switch to gas for power stations has made a significant and, to the Government, cost-free contribution to our expected achievement of our emission targets for the year 2000. That is a reflection both of the higher conversion efficiency of CCGT technology and the lower carbon content of the fuel. A unit of electricity from a coal-fired power station produces about twice as much CO 2 as the same unit from a CCGT. That is just a simple point of physics and chemistry.At the climate change conference in Kyoto last month, European member states agreed to an 8 per cent. cut in a basket of six greenhouse gases by 2010. Over the coming months, the European Union will agree how each individual member state will share the burden of that overall target.
I turn now to the question of coal to which all noble Lords referred. The generators are continuing to buy UK coal, but not as much as they used to. As I have explained, the reason is the competition from gas but another factor is competition from imported coal. In spite of increased productivity, about which my noble friend Lord Hardy spoke, and in spite of the large reserves about which my noble friend Lord Orme spoke, coal sales are declining. Some producers have found markets for their output. The Longannet mine in Scotland has just agreed a six-year contract for its output and the smaller English and Welsh producers have also secured contracts. But RJB, the largest producer, has not secured markets for all its output. The Government have helped to facilitate negotiations between RJB and the generators for coal deliveries up to the end of June 1988. That will enable RJB to continue to reduce operating costs and, it is hoped, to improve its competitive position.
My noble friend Lord Hardy referred to the fact that the closure of mines has a great social consequence, especially where the mines are remote and communication is poor. I can only repeat, as many noble Lords will be aware, that on 6th October of last year, the Deputy Prime Minister announced the establishment of a task force to pioneer options for revitalising former coalfield areas. I understand that that task force will make its recommendations by March 1998, to be followed by a national conference for all interested parties in September 1998.
My noble friend Lord Hardy spoke of the mining equipment industry which will be facing difficulties if the indigenous mining industry contracts further. While I recognise that there are benefits in having a home market for one's products, that does not in itself determine the health of an industry. I know that the industry is in fact working with the DTI on finding out how it can more usefully demonstrate the equipment both in the UK and overseas. However, I should add that Indy car racing does not exist outside North America but nearly all the cars used in that sport are made here in the United Kingdom.
The noble Lord, Lord Gray, drew our attention to nuclear power. Nuclear power contributes about one-quarter of our electricity. Noble Lords were concerned about the future and safety of nuclear power stations. My noble friend Lord Hardy and the noble Lord, Lord Gray, spoke movingly about their concerns in relation to Chernobyl. Nuclear power stations are making a substantial contribution to our electricity generation. But the Health and Safety Executive concluded recently a programme of in-depth reviews for the safety of each of the UK's Magnox nuclear power stations. Following that safety review programme, the Health and Safety Executive is satisfied that, subject to continued satisfactory results from normal tests and inspections and further periodic safety reviews, the UK's remaining eight operating Magnox stations can continue to operate safely. And so it makes sense to use what we have while we have it. I say to the noble Lord, Lord Gray, that whether new nuclear power stations are built in future will depend on the generator's perception of costs and benefits compared with the other options.
My noble friend Lord Hardy asked about the generation costs of coal and gas power stations. It has been suggested that it is cheaper to generate electricity from coal than from gas. It is difficult to generalise. We believe that the marginal cost of generation from gas plant is lower than from coal. There is the issue of some early take-or-pay gas contracts which might have encouraged generation from gas even though coal was
cheaper because of prohibitions on the resale of that gas. We have asked the Director-General of Gas Supply to look into that.The issues covered by this Question are numerous and complicated. They devolve from technical, economic, social and industrial change and from actions of the previous Administration over a number of years. They intertwine with other responsibilities and policies, such as those relating to the environment and to trade, and are not amenable to a quick fix. That is why we are taking our time to review thoroughly the whole question of energy policy.
Before Christmas the Prime Minister announced in another place that the Government would review the long-term energy requirements of the nation to ensure that we have an energy policy consistent with a competitive industry and the long-term energy needs of the country. As I said, those reviews are in hand in a number of energy policy areas. When those reviews have been concluded, we shall be better placed to take a reasoned view of how best to take forward our energy policy objectives. Indeed, when they have been completed, I shall welcome the opportunity to debate them in your Lordships' House.
If I have not responded to any points raised this evening, I shall write to the noble Lord concerned. In the meantime, I thank all noble Lords who took part in the debate and, in particular, I should like to thank the noble Lord, Lord Hardy, once again for giving me the opportunity to respond to the points he made.
- House adjourned at nine minutes before eight o'clock.
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