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Lord Jenkin of Roding: I hesitate to join in a debate with two such acknowledged experts on the coal industry but, for my sins, for part of my career I was both a shadow Minister and a Minister for energy and I had to deal with the coal industry at that time. I remember 25 years ago visiting the Coal Research Establishment just outside Cheltenham. There I came across a man who was working very hard on the underground gasification of coal. I do not know whether that was a "clean" technology--we did not think of it in those terms. I remember putting my arm round his shoulders and saying, "Do you realise, my friend, that you have the whole of the future of the coal industry on your shoulders?" It was quite clear that we were not going to go on burning large tonnages of coal on the surface.

The noble Lord is absolutely right; it is another country. The resources of coal are huge. I remember discussing this issue with the then head of the energy department in Beijing, Mr Qu Che Ping. They were hoping to burn 1,200 million tonnes of coal, and I said to him, "My friend, you really cannot do that". This was some years ago, long before Kyoto and indeed before Rio. They are changing their view; they are realising that that actually is not on. They are now buying more nuclear energy. We have not said anything much about nuclear energy, but if there is clean coal technology which really can generate energy without polluting the earth, clearly that needs to be encouraged and promoted.

The Royal Commission report talks a lot about what I call--although it does not--the sequestration of carbon dioxide, where the CO 2 is extracted from the flue gases and put back down. The commission prefers it to be put back down under the sea, where it can

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remain in perpetuity: it is taken out of the atmosphere. It does not know yet whether that is economic. Clearly more work needs to be done in order to achieve what is needed. I agree that if we are to meet these renewable obligations, everything has to be encouraged. I very much agree with the noble Lord, Lord Ezra, that this needs longer-term backing and preferably contracts if it is to be achieved.

Lord McIntosh of Haringey: Perhaps I may speak first on Amendments Nos. 236 and 238, which would provide that obligations under the renewable powers could be met by clean coal as well as renewables. Let me start by saying that we certainly are supporters of clean coal. We have a substantial support programme for clean coal technology.

The Government's policy is to encourage the development of cleaner coal technologies for application both at home and overseas. I entirely take the point made by my noble friend Lord Hardy, that research and development on cleaner coal technology will not only benefit the British coal industry but also provide huge export potential for very much larger coal industries in other countries.

The policy is being implemented in a six-year programme, which started in April 1999, linking research and development with technology transfer and export promotion. The broad aim of the programme is to provide a catalyst for UK industry to develop cleaner coal technologies and to obtain an appropriate share of the growing world market for the technologies.

The programme will encourage collaboration between UK industry and universities in the development of the technologies and expertise. It is expected that projects worth over £60 million in R&D will be generated as a result of the DTI's contribution of £12 million over three years. Through this programme the DTI will be able to contribute to a global strategy to contain the growth of carbon dioxide (CO 2 ), a recognised greenhouse gas, in developing countries in collaboration with the IEA and OECD countries.

The principal aim of the programme is to develop advanced power generation as recommended by the industry-led Foresight Task Force and to help industry meet the Foresight technology targets. Other aims are to encourage fundamental coal science research in support of the Foresight technology targets and to examine the potential for developing the UK coal-bed methane resource and underground coal gasification technology, to which the noble Lord, Lord Jenkin, referred.

The Foresight investigation into cleaner coal technology identified a case for plant demonstration from 2005. This is the issue of the demonstration plant to which the noble Lord, Lord Ezra, referred and to which he has devoted a substantial part of his distinguished career. The Government undertook a detailed review of its cleaner coal technology programme and published their conclusions in April 1999 in Energy Paper 67. The Government undertook

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to maintain strong support for cleaner coal R&D with DTI funding of £12 million, to which I have already referred.

Government support for demonstration projects is not seen as a priority at present, for two main reasons. First, a number of commercially proven cleaner coal technologies are available to the electricity industry from a number of technology suppliers and licensees in both the UK and overseas. These do not need to be demonstrated again on a commercial scale and subsidised by the UK taxpayer. Information about these technologies, their technical characteristics and economics is well known to the UK electricity industry should it choose to invest in them. Government support is focused on supporting R&D to develop more advanced technologies capable of offering substantial improvements in efficiency and environmental performance.

Secondly, the UK has a number of moderately efficient generating units which offer the electricity industry the option of incremental improvements to existing plant. These include the strategic installation of flue gas desulphurisation in the most heavily used stations rather than investing in new plant. Although the environmental benefits from that are not as good as those obtainable from currently available cleaner coal plant, the difference in cost is not sufficiently great to justify the very large difference in costs between the two approaches.

I have expressed, I hope in some detail, our support for cleaner coal. However, it does not follow from that that we can support the amendments. We must bear in mind the fact that coal is not renewable and the Government do not consider that it could be considered as an alternative to renewables. The amendment would spread the number of technologies which would be available for the renewable obligation. That would dilute the renewable obligation rather than add to it. At present, we have the renewable obligation, the 10 per cent obligation and the expenditure on and research into clean coal on top of that. The renewable provisions are intended to meet environmental objectives. The effect of the amendments would tend to work in the opposite direction, either by displacing renewables directly or by imposing competing demands on the purse of the electricity consumers. We therefore regret that we are unable to support the amendment.

On the other hand, Amendment No. 241 addresses a discrepancy in the Bill. There are provisions in the clauses on energy efficiency, standards of performance and licence modification which place requirements on the Secretary of State or the authority relating to avoiding distorting competition when exercising the powers. It is reasonable that renewables should be treated in that way.

Amendment No. 241 goes too far by ruling out any distortion in competition. We envisage the possibility of some difference in the obligations on new suppliers, which I referred to in discussing the previous amendments, although noble Lords opposite did not care for that. As elsewhere in the Bill, we think that we

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should be exercising powers so that no supplier should be unduly disadvantaged in competing with other suppliers.

I accept the principle of the amendment, but I ask the noble Baroness, Lady Buscombe, not to move it. We shall come back with our own amendment at Report stage.

10.15 p.m.

Lord Ezra: I listened with pleasure to the enumeration of the ways in which the Government are helping forward research and development in relation to clean coal technology. However, I was disconcerted by the fact that they take a different view from my own and that of the noble Lord, Lord Hardy, on when we should see a large-scale plant in operation in the UK. Until we have that, we will not have got anywhere with clean coal technology--a technology that is well known.

While more research is desirable and research always leads somewhere, the time comes when we must start producing what the research points to. Unless we can have a production plant here of sufficient size, we shall not obtain the overseas orders; they will go to those countries where such plants exist.

Furthermore, we are offered the opportunity through the obligation to introduce an element of clean coal technology. I do not agree that this proposal will dilute the obligation; indeed, it would add to and strengthen it. It would mean that we are looking widely at all our energy resources to see how we can improve the atmospheric situation. I wonder whether the noble Lord will discuss this issue with the other matters we shall be discussing to see whether we can make headway perhaps in another direction and achieve what appears to be a common objective.

Lord McIntosh of Haringey: I am sure that this will be on the agenda for the meetings in which we have already said we will take part with interested parties.

Lord Hardy of Wath: I am grateful to my noble friend. Obviously the Government are sympathetic. But there is a need for demonstration. I trust that we can discuss that matter and that it will receive favourable consideration. Given the response of my noble friend, we have taken the matter as far as we can at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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