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There is another parallel possibility, though, which we should be aiming at, and I confess that I am a little surprised that it is not contained here. I hope that the Government will be prepared to give it serious consideration, if possible, within the future shaping of this Bill. If not, this is something that we need to put down as a marker for the future.
I refer, as I have done before in your Lordships' House, to the challenging prospect of underground coal gasification, UCG for short. Gasification plants
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I stress the context of this proposal. Obviously we need different energy sources such as renewables and nuclear. That has got to be done, but it is probably not enough. Our own existing coal stocks, though, as has been mentioned, are massive and now largely unexploited. Those who know tell me that there is a lot more coal under my county, County Durham, than was ever dug out; indeed, some estimates put it at 75 per cent or even over 90 per cent. According to the British Geological Survey, there could be enough still down there to supply the energy needs of this country for 300 years.
I should declare a belated and second-hand interest: the mineral rights in County Durham used to belong to my predecessors, the Bishops of Durham, but, after the demise of nationalisation, those rights have now reverted to the Church Commissioners, to whom were granted-unwisely, in my view-stewardship of the ancient episcopal assets. We have all this coal and yet, despite that, we are importing nearly 50 million tonnes of coal per annum from, as has been said, Poland, South Africa, Russia-
A noble Lord: The United States.
The Lord Bishop of Durham: From the United States, and elsewhere. It does not take genius to see that there is something wrong with this picture. I thought that this Bill could have been the place where that nettle was grasped. What is to be done? Open-cast digging can be successful on a relatively small scale and in a short timeframe, and can sometimes work for the long-term good of some bits of land, but when practised on the massive scale that we have seen recently in parts of the north-east it causes major environmental damage. In any case, it is impossible for the considerable seams of coal that are under the North Sea-you cannot dig there-and even when you have got it out you are still left with the challenge of clean use. The alternative of deep mining, the old-fashioned sort, even with the technology that would now be available, is still a dangerous business and the disposal of waste remains a problem.
I suspect-this is not a party point; it covers all bases-that we have seen nothing done now for 20 years because the appalling social cost of the miners' strike in the 1980s has meant that successive Governments have not wanted to go anywhere near the use of our own coal resources; it would scare everyone silly. However, quite apart from the long-term social deprivation still suffered by many of the old mining communities-I know that there have been wonderful regeneration projects, but the deprivation levels remain shocking; I was visiting some of the old mining towns the weekend before last and it is still appalling that people are living in those conditions-to ignore our existing energy resources because of the bad social experiences of a previous generation looks like cutting off our nose to spite our face.
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The other wider reason for pursuing better uses of existing resources is the urgent need in other parts of the world, China and India being the obvious examples, to develop the appropriate technologies. If we could develop that technology ourselves and then export it, we would not only profit ourselves but be in a position to help other countries meet their future carbon needs as well.
The particular irony of all this is that two of the universities in my region, Newcastle and Durham, have been working on precisely this UCG technology. They should now be given the chance and, equally importantly, the funding to develop pilot projects to show what can be done. If with this Bill we can set up four CCS demonstration projects, why should we not also set up four or more underground gasification projects?
This proposal is not new. As long ago as April 2003, the noble Lord, Lord McIntosh of Haringey, spoke about possible collaboration with the USA's FutureGen project and advocated gasification projects, but nothing has been done. There have been more recent exchanges as well.
The questions pile up, and perhaps they could be addressed in the present Bill: what has happened to all those projects that have been talked and written about and had initial research done on? Why did they need foreign investment-in one case, Russian money? When the Government pour billions of pounds of taxpayers' money into projects that many taxpayers oppose, why should the future use of our energy resources be dependent on individual entrepreneurs backed by foreign investors? Of course, nobody wants to go back to the spiralling costs of the past when the public purse was treated, so to speak, as a bottomless pit in its own right, but at a time when other Governments, like Germany's, have been heavily subsidising their coal industries, why should our Government not take a lead in investing in the future use of our own resources, for the benefit of our own communities?
Setting up and installing gasification is, obviously, expensive, but it does not put at risk human lives or the countryside and it does not pollute the atmosphere. When the real costs of not doing it are taken into account-continuing to import foreign coal, the CCS technology on the surface, the communities that were dependent on coal and are still suffering-there is a very strong case for proceeding.
I raised these and similar questions in your Lordships' House in January 2007 and followed them up with a letter to the noble Lord, Lord Davies of Oldham. In his reply to me of 13 March 2007, he spoke at length in his inimitable style of the present energy policy, and agreed that the DTI's old Cleaner Fossil Fuels programme had carried out an assessment of UCG. This showed, he said, that UCG had advanced to a stage where it was economically comparable with conventional mining. But, he went on, it would need to be deployed in combination with CCS to make any significant contribution to carbon abatement. I am not an expert, but I suspect that those who are would challenge that statement. In any case, the question is how to use our own resources. The UK strategy, said the noble Lord, did not see UCG as a specific technology to pursue
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Without knowing the details, it is hard to comment on the noble Lord's further statement that the joining fee for the FutureGen project was not thought to be a cost-effective use of public funds, but, when the future use of our own resources is at stake, a strong case can and should be made for it. I and many others around the old mining areas would greatly welcome it if the present Bill could eventually include this kind of project.
As may be obvious, I am neither an industrialist nor an economist. However, I live in the midst of a proud but somewhat battered old mining community, which still believes doggedly that the coal under its land ought to be used, and used wisely, not least to provide fresh employment. My predecessor but one, David Jenkins, known to many noble Lords, famously stood by the mining communities in the 1980s. My predecessor of a century of more ago, BF Westcott, actually settled the miners' strike in the mid-1890s, including, in a remarkable exercise of episcopal power, sending a messenger to the railway station late in the negotiations, telling them to hold the London train because his Lordship had not yet finished his work. Sadly, I no longer have that power, nor indeed the mineral rights themselves, but I stand with and speak on behalf of the region that I love and serve when I express the hope that the Bill might include proposals for the future use of our own resources and of all available technologies, and that the UCG option, already being developed in the universities of the region, should now be given a chance to prove itself in action.
6.59 pm
Lord O'Neill of Clackmannan: My Lords, in some ways I am tempted by what the right reverend Prelate says. For 26 years I represented mining communities of a similar character to those in Durham. In the first instance, it would be difficult now to recruit men to go down the shafts to do the preparatory work for UCG. It is also the case that one of the casualties of the privatisation of the coal industry was the laboratories of old British coal, which probably had centred in them more expertise and inventive researchers than any other body in the world. When we talk, as we will this evening, of carbon capture and storage, as the man asking the way to Cork was told, "We would not start from here".
I welcome this Bill. It has been chastised as being modest. I think it is one of a succession of steps that the Labour Government have taken up a learning curve that some of us wished they had moved up a little more quickly. However, the emphasis in the Bill on carbon capture and storage, the alleviation of fuel poverty in a limited way, and also consideration of the powers of Ofgem are all welcome.
I do not want to say too much on carbon capture and storage. We know that the technologies are limited at present. Operations are around 30 megawatts and they need to be in the order of 400 megawatts to make them comparable to at least one of the turbines of any
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We have to guard against the presumption that the provision of public funds by the United Kingdom Government will in itself produce a solution; that we will somehow have a bullet painted not silver but red, white and blue that will somehow solve the problems of carbon capture and storage. It is an industry that we hope will take off and even the Government's modest, but not unrealistic, ambitions say it will be at the earliest 2020 or 2022 for the first stage and perhaps 2025 for a bolt-on development. If that is the case, it will be seven to 10 years beyond the large plant directive which will make coal burning and some aspects of gas burning very expensive if there is an interim period before this new technology comes in.
I am not negative about CCS. I want it to work but I recognise that we have to be careful and not over- enthuse about it. On the front page of this morning's Scotsmanspokesmen for the Scottish National Party were saying that they are confident that 500 jobs a month will be created in green technologies in Scotland alone over the next 10 years. God knows how they are going to do that but I leave that to others to work out. There are a number of research laboratories across the United Kingdom and institutions have been mentioned already-the bright ideas bank has many borrowers at the moment. I am not sure how much of it will actually deliver the kind of returns that we would want. I certainly wish the Government well.
I have argued that when we are going to have competition it should be limited. Now we are not really having competition of the same order but we are going to have a bet on CCS, there are a number of other countries that might beat us to the punch. However, it is worth being there not necessarily because it will make a dramatic impact on UK generation but rather because it will give us an opportunity to sell our wares elsewhere in the world where they are of greater significance. One obviously thinks first of India and China, both of which have people of talent equal to our own and probably working twice as hard as we are. I do not mean any disrespect to the people we have in the United Kingdom, but it is a fact that they have so many people whom they can put to it.
I spoke about fuel poverty in the Queen's Speech debate in anticipation of this Bill but I think it bears repetition to a small extent. This Bill formalises the social tariff which will enable a number of poorer people to be given some assistance by clever use of Government data. We will see the alleviation to an extent of fuel poverty for a number of pensioners over 70 who are currently on pension credit. I speak here as the vice-president of National Energy Action and the president of its Scottish equivalent, Energy Action Scotland. They have provided compelling figures which suggest that the £80 that is going to be available for pensioners over 70 on pension credit could be made
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In this context, there are some 4.1 million households: 2.7 million of them are covered by pension credit; 1.4 million are affected by disability and the other groupings previously mentioned. It would currently cost in the order of £320 million to pay the individuals. That would account for something like £13 a household. Currently we consumers are paying some £84 per household for environmental ROCs and other forms of assistance and subsidy. For a relatively modest amount of money we could do a lot for other vulnerable groupings. Some noble Lords may well have received letters from Macmillan Cancer Support containing quite disturbing statistics about the number of people who are not in receipt of benefit and are suffering from cancer and deserve support. I was quite shocked- I did not appreciate the extent of such disadvantage.
In the summer consultations which the Government are required to fulfil under the legislation, I would hope that some of these specific cases that I outlined, and in particular the cancer sufferers, will be given some kind of assistance. I am not one of those who will go out of my way to criticise the Government for what they have done about fuel poverty because in a number of respects they have worked very hard to deal with households and with individual circumstances. The problem is that energy prices have oscillated in such a bizarre and unkind way over the past five or six years, in circumstances beyond the control of the British Government. The Government deserve credit but it must be extremely frustrating when we see that so many of these matters are now beyond the control and capability of the national Government. Indeed, it has to be said that the European Union is coming towards some kind of regulatory understanding. I would not use the word "regime". There are efforts being made but, sadly, they are probably not going to be capable of assistance. Therefore more and more will be dependent on the use of the social security system and the inventive use of statistical information now available to the Government following the legislation allowing information on pensions and other social security benefits to be switched from one department to another.
I also welcome the extension and the refining of some of Ofgem's roles. I have often felt that Ofgem as a regulator left a bit to be desired. When we discussed the NPS statement there was a certain degree of impatience, uncharacteristic impatience, in the Minister's views about certain views expressed by the Ofgem.
This Bill is fairly modest and could be handled quickly before an election. However, I would like to think that after the election we would look afresh at the regulation of energy. After 10 to 12 years we have gone from the adventure playground of the free marketers, the Hobart House brigade over at the Institute of Economic Affairs-people whom I, as a student in the 1960s, thought represented the dark side of the moon. They were given virtually complete control of energy
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If we are to review the role of Ofgem post the general election, the people opposite have to recognise the sort of things we have to look at. We have to consider security of supply and whether it should be the responsibility of the state to have the appropriate places in which to store the gas we need. We do not have enough at the moment; we do not need as much as the French and the Germans because we have rather a large store in the North Sea. Nevertheless, we need an enhanced amount. An example of market failure has been the inability of energy companies to bend their minds to this issue. They have not dealt with it adequately. As chairman of a Select Committee in another place, I banged on for years about having better storage facilities for LNG and the like.
We will have an opportunity to do something post the election, regardless of who wins-and noble Lords know who I want to win. A Government of any complexion must look at energy security, the role of regulation and the role of the state. There is a case, in light of the market failure over the past 20 years, for which I am not castigating only the present Government-the previous ones were just as culpable.
This is a relatively modest piece of legislation which goes quite a way to meet concerns a number of us have on specific issues, and I am happy to give it my support. I would like to think that the Government will be concerned about fuel poverty as well as about the poverty of ambition regarding some of the objectives that we could achieve. If there is one reason above all others for having another Labour Government, it is that nothing I have heard from the Benches opposite suggests that they are as ambitious or as capable of dealing with these matters as my noble friend.
7.12 pm
Lord Jenkin of Roding: My Lords, I am prepared to enter into a bet that the noble Lord, Lord O'Neill, has not in fact read the paper to which my noble friend on the Front Bench referred. If he has, and he still believes what he has just said, then perhaps he can stand up and say so. If he has not read it, he should not criticise my party's policy.
Lord O'Neill of Clackmannan: I would call the noble Lord a friend personally, although politically I regard him as an enemy. He has this capacity for banging old drums or flogging old horses. This was last week's speech. I have had the opportunity to read this paper and I do not regard it as a Green Paper. I repeat what I said earlier about this idea that somehow a party in opposition can produce White and Green Papers. It should win the election first and then produce them. As far as I am concerned, the policies of the party opposite still have a long way to go. I remember the poverty of the noble Lord's ideas when he was Energy Minister; he has learnt nothing and forgotten nothing.
Lord Jenkin of Roding: I do not propose to take lessons from the noble Lord on how to win elections.
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I listened with fascination to the right reverend Prelate the Bishop of Durham. I remember the exchanges we had at Question Time in 2007 to which he referred. I continue to get, through various blogs, all sorts of information about what is going on out there on the underground gasification of coal. Like him, I am astonished that there seems to be so little official interest in this. One of the things I remember from our earlier exchanges is that his miners do not want to go underground again. Underground gasification of coal is the way to exploit those energy resources, without the kind of problems which faced miners going underground.
A Second Reading debate is a temptation to embark on a tour d'horizon of energy policy across the board. After all, we have now had three hard-hitting reports, all of which have claimed, with some justification and much force, that the Government's energy policy is failing. The Institution of Mechanical Engineers, the Royal Academy of Engineering and the Minister's favourite regulator, Ofgem, have all demanded that there has to be a much more structured and clear policy for energy in this country. The House will be relieved to know that I shall resist the temptation, partly because we were engaged in nearly 12 hours of debate in Grand Committee on the national policy statements, but mainly because it would not be appropriate at this hour. All I will say is that the Bill makes precious little progress towards that kind of reform of energy policy which this country so desperately needs.
Unlike most of the other speakers in this debate so far, I am going to talk about the Bill, which contains two issues that need to be examined. The first is carbon capture and storage. Again, we discussed this at some length on 11 March in Grand Committee. The Bill creates the mechanism by which the demonstration projects-I believe that they are still called that-will be financed. However, it is a sad story of dither and delay.
As my noble friend on the Front Bench said, we do not know about these schemes of assistance. Everything will be set out in regulations, of which we have not yet seen any drafts, and there is no estimate of cost. What we have got in the past few days-indeed, since the last time the Minister addressed us in Grand Committee-is an indication of some of the companies that may be taking part in this competition. From the press release issued by the department on 17 March, we know that Scottish Power, with its project at Longannet, is certainly one of them and that Scottish and Southern at Ferrybridge in Yorkshire may be another. Then there is the E.ON project at Kingsnorth in Kent. Some of these are described as having got to the stage of front-end engineering studies. I am not quite sure what that means, but it does not sound very well advanced.
The most alarming statement I have seen recently was in a very well informed article in the Guardian. It said that there was a competition for contenders and that,
Has the Guardian journalist got it right? Is it true that we will not know anything until next year, 2011? Perhaps the Minister will be able to give us an answer.
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Part 2 of the Bill covers schemes for reducing fuel poverty. I, too, agree with every other speaker that this is a very important part of the Bill. However, I have some questions and have given the Minister notice that I wish to raise them. The House will remember the background; under the Carbon Emissions Reduction Target, as the Minister mentioned, 11 million households would be helped with loft and cavity wall insulation. Right from the beginning, it troubled me how the companies were to know who they were supposed to help. I remember an exchange across the Floor of the House with the noble Lord, Lord Rooker, who was quite unable to tell us. The companies had to go on a fishing expedition, knocking on doors, trying to find out who had not had the work done and who was entitled under programmes such as Warm Front. It was extraordinary.
We started with the Pensions Act 2008 and its regulations, which we debated in Grand Committee last January, where there was a tiny first step of data sharing between the Government and the energy companies relating to people who were entitled to the guaranteed element of pension credit. The noble Lord has no doubt studied it: it is a very small part of the 11 million households that are supposed to be benefiting from those programmes.
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