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Lord Jenkin of Roding: I was drawing my remarks to a close. It seems to me that I am fated to be interrupted. My peroration disappears into the ether along, no doubt, with a lot of coal mine methane. But perhaps I may just finish my remarks. I was trying to explore the possible reasons for there appearing to be such resistance within Whitehall to the extension of the
renewables obligation for coal mine methane. I suggested that one reason was the extent to which it achieved the CO 2 objectives and would draw off some of the renewables obligation money, thus impacting adversely on wind power.I have received a comment on this issue from a director of a consulting firm, who writes:
- "We have found the DTI privately sympathetic but reluctant to apply the resources needed to carve out CMM from the exclusions from the scheme. Internal lawyers became concerned that precedents may be set that might allow CBM or normal gas production to seek ROC accreditation".
- "We proposed a number of solutions to these points (eg restrict the exemption to abandoned mines/historic mining areas as per your amendment)"—
- "but found the DTI lacking in resolve to make the required effort".
- "I hope that, with your help, we will at last achieve the fair result that will put CMM (coal mine methane) on a par with Landfill Gas".
In their energy White Paper, the Government set as their central target the reduction of CO 2 emissions in order to play a part in resolving the global climate change problem. Therefore, I simply do not understand why they find that they cannot give such an emission, which is 23 times as damaging as an ordinary CO 2 emission, the necessary help to make the industry effective in this country. I beg to move.
Lord Ezra: I have much pleasure in supporting Amendment No. 132A, so effectively moved by the noble Lord, Lord Jenkin of Roding. I have had the pleasure of sitting on the joint group of Peers, which he has led for some years and which promotes this concept. Like him, I was much impressed by the way that the Ministers, whom we met, accepted the case. But, as soon as the case went into the back office, somehow or other the validity which the Ministers saw in it disappeared.
I am as perplexed as the noble Lord, Lord Jenkin, is and as, I am sure, are most noble Lords in the Grand Committee as to why there is this rearguard action to prevent such a desirable activity being pursued. Here we are talking of the escape of a really lethal gas, far more lethal to the environment than CO 2 , which could easily be dealt with—and that is being dealt with under the larger schemes. But there are now a number of smaller schemes, which, without specific support, cannot go ahead, but in aggregate would amount to a good deal of CO 2 reduction. The case of Germany stands out, as that country has forged ahead, and British firms in the sector, disappointed at the lack of support in Britain, have moved there to develop their interests.
It is incumbent on Ministers, unless they are prepared to accept the amendment, to let us know what lies behind the Government's objections to it which seem totally contradictory to their environmental policy as set out in the energy White Paper. We should be quite clear what the reasoning is. The case for doing what is suggested is so compelling and the cost for doing it is so small, that it is very difficult to see how objections to the amendment can be sustained.
Lord Whitty: Noble Lords have made a strong case for regarding coal mine methane as something that could positively contribute to an energy policy. Indeed, there are aspects of government policy that already support that, and others that we are considering. What Noble Lords have not made the case for, and what is the basic objection to the amendment, is for coal mine methane to be treated as a renewable. It is not a renewable but a gas extracted from a fossil fuel. There is an argument about displacing support for other renewables, but there is also a legal and definitional point that we would not be able to obtain state aid approval, which would include the recycling of the fossil fuel fund, to support a technology under the renewables obligation, because it is not classified as a renewable under the renewables directive. There are both common-sense and legal reasons why we cannot regard coal mine methane as a renewable.
The Government certainly recognise and value the benefits that coal mine methane provides through the tapping of emissions from abandoned and working mines and putting them to beneficial use. The Government have already demonstrated their support for that through the exemption from the climate change levy in last year's Budget, to which the noble Lord, Lord Jenkin, referred. That was approved by the European Commission and came into effect on 1 November. The energy White Paper also accepts the need to control CMM emissions and promises that we shall work with the industry and relevant environmental organisations to ensure that is done effectively. To that end, the DTI has commissioned a study to see whether any possible market mechanisms would be consistent with the aims of the White Paper and could be deployed to control the emissions. That study will report soon.
The fact remains that coal mine methane cannot in the normal sense be regarded as renewable. Even when used for power generation it still emits carbon dioxide, so it cannot be said to be a clean fuel, although it does have advantages in relation to direct burning of carbon. However, it cannot be classified as a renewable fuel.
The experience in Germany has been referred to. The German approach to coal mine methane is not one that we or other member states are seeking to follow, for the very reason that it effectively treats methane as a renewable, but not a renewable under the terms of the renewables obligation. The feed-in tariff, which is the mechanism used in Germany for support of coal
mine methane, is not state aid as the renewables obligation is regarded as being, specifically with regard to the recycling of the buy-out fund.There are also difficulties with the trading scheme, to which the noble Lord, Lord Jenkin, also referred. With regard to a working mine, the amount of methane emitted can be measured and the benefit can also be measured. However, there is no measurable benefit from abandoned mines. While working mine methane is measurable, that would provide a basis on which to quantify the improvement in and the contribution to carbon saving through the emissions trading scheme. In addition to the DTI study to which I referred earlier, Defra has commissioned a separate study to determine a baseline for methane emissions which could enable coal mine methane to qualify for the emissions trading scheme and hence for the industry to receive a value for the emissions avoided through their use within the trading scheme context.
We are aware that the argument made by the industry for extending the renewables obligation has been made very forcefully and very frequently. However, as the energy White Paper emphasised, the renewables obligation has a specific aim—to develop long-term, carbon-free generation technologies to the point where they become economically viable in their own right. Offering the obligation more widely risks undermining that longer term objective. To extend it specifically to methane extraction would be difficult to justify since you would then have to make a further calculation regarding how much methane leaks naturally and how much is extracted by the process of recovery which would not otherwise have been emitted. That form of measurement, which would feed back into the baseline of the calculations for the trading scheme, is also covered by the study commissioned by Defra.
However, the basic objection—as opposed to any great conspiracy theory—to not using this mechanism to support the coal methane industry is that in no circumstances, either in logic or in law, could coal mine methane be regarded as a renewable fuel. There are, of course, safety issues, to which the noble Lord referred when he mentioned the Arkwright coal mine, which have to be taken into account by those responsible for such issues and for environmental controls, principally under the heading of health and safety. However, the environmental benefit of coal mine methane will not be able to be supported through its inclusion in the renewables obligation. There may be other ways in which we can support it, but not that way.
Baroness Byford: I am grateful to the Minister for his response to my noble friend's amendment but I am very puzzled. The Minister clearly said that at the end of the day it comes down to money and what money is allowed or is not allowed, and that the measure—I believe that I interpret him correctly—would fall foul of the state aid rule if we applied it in the way that my noble friend wishes. Therefore, my question to the Minister is, how does Germany do it? Why can Germany do something but we are not allowed to do it? We are all in the same Community battling under the same rules. I am absolutely intrigued by the matter.
The Minister said that the DTI has commissioned a study that will report soon and that Defra has also commissioned a study. How soon will those reports be published and what kind of information can we expect from them? My initial reaction is that I should have thought that what applies in one country would apply in another. I am very confused.
5.30 p.m.
Lord Whitty: Germany is not operating under the renewables obligation to support the methane industry.
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