Coal Liquefaction (Hansard, 28 June 1982)

§ 1. Mr. Eadie
asked the Secretary of State for Energy if he will make a statement on the current progress of the development of oil from coal process.

§ 5. Mr. Dormand
asked the Secretary of State for Energy if he will make a statement on the progress of the Government's coal liquefaction policy.

§ 6. Sir Anthony Meyer
asked the Secretary of State for Energy if he will make a further statement on Government support for the National Coal Board's project for the liquefaction of coal.

§ 8. Mr. Edwin Wainwright
asked the Secretary of State for Energy if he will make a statement on the future plans for coal liquefication in the United Kingdom; and if he will make a statement.

§ The Under-Secretary of State for Energy (Mr. John Moore)
I understand that British Petroleum and Phillips Petroleum have informed the National Coal Board that they do not wish to participate in a 25 tonne a day pilot plant at this stage. I have, therefore, asked the NCB to undertake a thorough review of the project prior to firm decisions being taken on how to proceed.

Several Hon. Members
rose—

§ Mr. Speaker
Order. I propose to call first those whose questions are being answered.

§ Mr. Eadie
Is the hon. Gentleman aware that the Opposition will regard the Government as having broken their promise if they do not proceed with the development of the oil from coal process? Is he further aware that for three years the Government have given specific promises? There have been the Energy Conservation Act 1981, the Coal Industry Act 1980 and the Coal Industry Act 1982. The truth is, as the hon. Gentleman must be aware, that the financial meanness of the Government is causing this project to flounder.

§ Mr. Speaker
Order. That might be the preamble to a question, but there ought to be a question.

§ Mr. Eadie
Is the hon. Gentleman aware that he and his hon. Friend the Member for Flint, West (Sir A. Meyer) told us that they were keeping their eagle eyes on the scheme? Some eagle, some eyes! Mr. Moore: For those who are interested in the long-term future of the coal industry, emotion is no substitute for the facts. The Government's position has not changed. The offer of £5 million, subject to substantial private-sector participation, is still on the table. It would he remiss of the Government, and not in the interest of the coal industry or the nation, not to take cognisance of the facts.

§ Mr. Dormand
Is the Minister aware that while what my hon. Friend the Member for Midlothian (Mr. Eadie) said is absolutely true, it is not merely a question of finance, but of the Government's doctrinaire attitude? Does the Minister agree that the whole project, and subsequent projects, should be completely funded by the Government? Is the Minister aware of any other withdrawal of capital investment in the project?

§ Mr. Moore
Those who are genuinely interested in the long-term future of the coal industry, as opposed to making partisan political points, might wish to check with the National Coal Board, which has confirmed that it will be preparing the review so that it can clearly establish facts that it might not be wise to discuss on the Floor of the House.

§ Sir Anthony Meyer
Does my hon. Friend agree that the accusation of a doctrinaire approach comes ill from Members of the Labour Party who are making no effort to dissociate themselves from the doctrinaire exploitation of his position by Mr. Scargill? Does my hon. Friend further agree that the key is to be found in Europe? Although the present contribution by the Community probably represents the maximum permissible under present policy, will my hon. Friend take the opportunity at the next meeting of Council of Energy Ministers to raise the whole issue of liquefaction as an essential ingredient of fuel policy?

§ Mr. Moore
My hon. Friend makes a legitimate point. I hope that he heard me say that the National Coal Board has agreed to review the matter. A review is clearly necessary. It might be premature, until the review is completed, to ask for further aid beyond that offered by the Community.

§ Mr. Wainwright
Does the Minister realise that some of us are fed up with the Conservative Government, and with other Governments for that matter, delaying research and development? For too long we have played about and lost our advantage in this sphere. Does the Minister further realise that we are giving away to the Japanese and to other developed nations—and probably to some of the developing nations—the liquefaction of coal because we are holding back instead of going forward as fast as possible?

§ Mr. Moore
I have great respect for the hon. Gentleman and his commitment to the coal industry, but I hope that he will listen carefully to me. There is no delay, other than that needed to ensure the long-term success of such developments. That success is what all of us who are interested in the coal industry wish to see.

§ Mr. Rost
Should we not recognise that coal conversion will be economic only if the price of coal 593 remains competitive, and that this will happen only if the phasing out of uneconomic, high-cost pits is allowed to continue?

§ Mr. Moore
We are at this moment considering the scientific aspects of the project. My hon. Friend is correct to draw to the attention of the House a key ingredient of all liquefaction projects—the cost of the coal.

§ Mr. J. Dickson Mabon
The Minister referred to further aid from the European Community. How much is actually on offer? Is it within the £5 million to which he referred? Will the review examine the possibility of an application to the EEC for further aid, as the subject is also a matter of interest to Community countries?

§ Mr. Moore
The Community offer is considerably in excess of the £5 million. It amounts to approximately 40 per cent. of the planned project cost. I shall send the right hon. Gentleman full details. I feel that the right hon. Gentleman, like other hon. Members, might first want to hear the Coal Board's views on the review.

§ Mr. Skeet
Is the Minister aware that the United Kingdom project is totally uneconomic? Is he also aware that the amount of fuel oil which we anticipated would be produced in the United Kingdom has drastically slumped and that there is, therefore, not the demand for this type of oil?

§ Mr. Moore
With respect to my hon. Friend's extensive knowledge of this subject, I suggest that none of us should allow ourselves to be too shortsighted. We are talking about the very long term. I am addressing myself to the technological questions and the nature of the technology. That seems an area that requires further review.

§ Mr. Woodall
Does the Minister realise that liquefaction has proved successful in other countries, notably South Africa, and that the long-term future of the coal industry is tied up with liquefaction? Knowing the Government's attitudes towards nuclear development, we are asking for guarantees of schemes that will keep the coal industry viable well into the next century.

§ Mr. Moore
I am sure that none of us would want to associate ourselves with the wage costs associated with the example that the hon. Gentleman mentioned. I am sure, too, that none of us would deny that the technology in South Africa is chalk and cheese in relation to the kind of technology involved in future, long term, high technology liquefaction projects. We are talking about a review. It is necessary, at this time, to examine this project.

§ Mr. Eadie
On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment as soon as possible.