EUROPEAN COMMUNITIES COMMITTEE

HL Deb 09 December 1974 vol 355 cc445-500

4.37 p.m.

Debate resumed.

The Earl of BESSBOROUGH

My Lords, it is most unusual that your Lordships' House should have three Statements on a Monday, but I have been happy to wait, at the request of the noble Lord, Lord Strabolgi, because certainly two of the Statements have been extremely relevant to our debate, and perhaps also the third one. On this energy saving day I, too, am very glad that the noble Earl, Lord Lauderdale, put down this Motion for debate in your Lordships' House. I congratulate him on his speech, and if I may say so, on his new chairmanship. I know from personal experience that he has been putting exceptional energy into this job, and he is an admirable chairman of that sub-committee.

I should like also this afternoon to be non-political. However, what I must say at the outset is that the document on which this Fifth Report comments is one which is dated 5th June, and the Select Committee's Report was ordered to be printed on 18th July. That document has, of course, been quite radically revised since June by the Commission. The new energy policy to which the Fifth Report refers was, in fact, only a first attempt on the part of the Commission to set out how the Community should respond to the energy crisis at the turn of last year. Since then the Commission has further consulted member States and other interested bodies, such as the European Parliament, of which I am a member, and the Economic and Social Council. Indeed, throughout the year European energy policy generally, as well as policies in specific fuel sectors, have been the subject of repeated discussions and debates in the Energy Committee of the European Parliament and also in plenary at Strasbourg and Luxembourg.

Then, on 19th September this year, the Commission was asked by the Council to develop quantitative objectives for the Community and guide lines for producers and consumers of energy in the Community. Only the week before last, the Commission submitted new proposals which will be discussed in the Energy Council on 17th December, and I assume in a general way at the summit today or tomorrow in Paris. All this means that the document we are discussing is out of date, and if we stuck merely to the noble Earl's Motion—and I hope he will not mind my going beyond it—our debate would inevitably have been somewhat academic.

Neither the noble Lord, Lord Champion, who was Chairman of the Committee at that time, nor the noble Earl, Lord Lauderdale, are at fault here, but the situation has changed and the proposals have been considerably revised. I greatly regret that the Commission's latest proposals do not seem to have been circulated to the Select Committee or to be available to Members of your Lordships' House. This puts your Lordships. in my view, in a slightly ludicrous position, which I hope in future will be remedied. I know that my noble friend Lady Tweedsmuir and her colleagues are doing their utmost to get rid of the backlog of previous documents as soon as possible in the New Year.

Lord BALOGH

My Lords, I am very sorry to correct the noble Earl, but we have that document and it is not materially changed so far as policy measures are concerned. If the noble Earl considers that it has been changed, I should like to ask him how it has been changed in such a way that the noble Earl can call our debate today ludicrous.

The Earl of BESSBOROUGH

My Lords, I am very interested in the noble Lord's observation, but I think that my noble friend Lord Lauderdale will confirm that these latest proposals have not been circulated to the Committee. I apologise if the word "ludicrous" is perhaps a little strong, but if we do not have the most recent documents to hand then it makes it a little difficult for us—and perhaps a little academic—to discuss a Paper produced in June. If the noble Lord will bear with me, I shall come later to the exact points, or the main points, on which the new proposals differ from those first proposals.

I was making the point about the availability of documents to the Select Committee, and I think that my noble friends agree with me that we should aim at trying to discuss the same documents at roughly the same time, or at times not too far apart. However, I have been in close touch with the Commission over the week-end, and if I may bring the House up-to-date—no doubt the noble Lord will bring us even further up-to-date—I understand that the new proposals will be broadly as follows: first of all, as the noble Lord, Lord Balogh, has said, the basic, overall policy of reducing reliance on imported energy remains unchanged, but, as I understand it, some amendments (and I hope the noble Lord is aware of these) to the original targets are proposed.

As I understand it, the most important differences are, first, a greater reduction in total consumption by 1985; that is to say, 1,475 million tons of oil equivalent—mtoe ("m toes" as we call them)—instead of 1,575 million tons of oil equivalent. Secondly, there is a reduction in the objectives for natural gas, with a suggested minimum threshold of 290 to 340 mtoes instead of 375 million tons of oil equivalent. Thirdly, there is a higher objective for hydro-electric and geothermal power; 43 mtoes instead of 35. Fourthly, as I see it, the target for nuclear generated electricity again remains unchanged, but aims at a lower target for industrial applications of nuclear heat.

Lord DAVIES of LEEK

My Lords, has the noble Earl the solid fuel figures? I am looking at the figures while the noble Earl is quoting the new ones. What is the new figure for the solid fuels? Or do they remain the same? I am thinking of coal, for instance.

The Earl of BESSBOROUGH

My Lords, I was about to come on to those figures. It is expected that our coal production in this country will greatly increas—and also that of West Germany—but I was going to say that a little later on. The objectives of maintaining coal production at its present level remain unchanged in the new document, but closures in Holland, Belgium, and France call for an increased effort from the United Kingdom—which I dearly hope we shall be able to make next year—and also, as I say, an increased effort from West Germany. As requested by the September Energy Council—I do not know whether the noble Lord, Lord Balogh, was there, but no doubt his Secretary of State was—these figures were established after due consideration of national forecasts, taking into account their technical and economic feasibility. But I would emphasise that they are targets (and I like to defend the Commission from time to time) and not forecasts. They are statements of what the 1985 Community energy situation is likely to be in the Commission's opinion. They are not forecasts of what it is likely to be if there is no change in present policies. The figures are not a simple sum of national intentions, but represent what could be achieved by pooling our efforts at the Community level, and even in the context of wider issues posed by international energy policy on a world scale.

I recognise that the targets are ambitious—and they were criticised as being, perhaps, too ambitious in the Select Committee's Report—but I feel that the present situation requires them of us. In that connection I was encouraged to read Lord Balogh's reasonably optimistic view of the United Kingdom's fuel situation in his speech last Thursday. The obstacles to the implementation of the Commission's targets are examined in the Commission's documents, and specific proposals for overcoming them are made in the various guideline documents as well as in the proposed directives and regulations. For nuclear energy in particular there exists an action programme originally drawn up in February of this year. It is proposed that these targets be pursued in a flexible planning framework with annual indicative plans indentifying the decisions required at each stage and after examining the progress made and the obstacles encountered. These plans could provide the opportunity to modify targets if the long term outlook changes again as a result of new developments.

Thus, in my view, ambition is tempered by realism and flexibility. Without ambition, very little can be changed. To change the basic trends in energy supply and demand will require a major effort over a long period of time. Anything less, in my opinion, is to tinker with marginalia. The Commission's firm attachment to an ambitious nuclear target is fundamental to the restructuring of the supply pattern. If we are to hold oil consumption to approximately the same level in 1985 as it was in 1973, the growth in demand must be met mainly from nuclear sources. Otherwise there will be swingeing cuts in consumption—those today may be considered to be not so swingeing—and a considerable change in life style which I hope will not come about as a result of today's Statement.

There might also be an increased dependence on imported oil, with all the implications for security and the balance of payments which that entails. It is perhaps an interesting fact that savings on the balance of payments—and I hope that the noble Lord, Lord Balogh, will agree about this—are roughly of the same order as the increased investment effort required if the development of nuclear energy is further accelerated. Thus, in economic terms, the choice is between a high level of internal investment largely met from European resources, or a continuing drain on resources required to meet a growing import bill by increased exports or transfer of assets overseas.

The Commission's document on nuclear fuel supply policy, which was released a little over a week ago, gives the answer to the statement towards the end of the first paragraph on Page 4 of the Select Committee's Report that no mention is made of the European Atomic Energy programme. I think that the Commis- sion's ongoing activities and its continuing discussions with national officials, the Energy Committee of the European Parliament, the Economic and Social Council, and other bodies, show its constant involvement in the existing atomic energy efforts by different member-States within the Community.

One minor point in the second paragraph on page 4 of the Select Committee's Report on which I should like briefly to comment, is the criticism that insufficient attention is being given by the Commission to the use of methanol in internal combustion engines. Methanol is certainly a secondary fuel, usually derived from oil or natural gas. But while it may be advantageous to use, it cannot possibly solve the primary problem which is the object of the Commission's Paper. I agree, however, that it should perhaps be included in the overall new Paper which the noble Lord mentioned, Energy in Europe, Research and Development; and I shall certainly suggest this to the Commission. I think I may say that the Governments in the Community—and I hope Her Majesty's Government—attach importance to the Commission's various energy proposals.

The Commission has recently released a full-scale action programme for the rational use of energy. I am informed that United Kingdom officials took an active part in drafting this programme. The original objective of a 10 per cent. saving by 1985 by the Community has been lifted to 15 per cent. for the Community as a whole, this after discussion with member States. Individual member States have, I suppose, more or less agreed to this according to their national resources. It is possible, as I think was suggested in the Kissinger proposals, that an annual action programme will be established to review the rate of progress which should be made each year.

The policy of the proposed energy agency was to have been entirely under the control of the Council of Ministers and heads of member States. No definite proposals on voting procedure were proposed. I can say that the idea is not pursued in the Commission's latest proposals. Meanwhile, as your Lordships know—and this may be largely as a result of the negotiations undertaken by the Government, and if so I give them credit—the United Kingdom has joined the international energy agency, an agency which, we must accept, whether we like it or not, has important supra-national aspects. Some of these discussions closely correspond to those envisaged for the Community's agency. In so far as the United Kingdom finds it acceptable to limit sovereignty over its resources in this wider context, in this wider international agency, there does not seem to me to be any obstacle to doing at least much the same within the Community itself, provided of course that the objectives and the voting procedures of the two agencies are essentially the same.

On the question of North Sea oil and sovereignty it is worth looking at the significant address which M. Simonet gave in Oxford on 5th December and to which the noble Earl referred. He said—I do not know whether the noble Earl quoted him fully in context— The rapid development of North Sea resources in the early 'eighties is in the interest of the United Kingdom and of the Community. No conflict of interest arises for the Community will pay the world price for what it buys and there need be no doubt that the United Kingdom always retains full sovereign rights to determine the rate of exploration and production should it at some later date decide to introduce a stricter conservation policy. To comment on what the noble Earl said, I would have thought that probably all the Commissioners within the Commission accept that statement. For my own part, let me say clearly that Scotland—and I would hope the United Kingdom as a whole—must be the first to benefit from the North Sea oil in the British sectors. But if, as I hope, Britain may also be in a position to export some of that oil, I would hope that other member States within the Community would be offered it in the first instance at the world price. It may be that we in the United Kingdom, as I think was said in another debate recently, may want to continue to import heavy oil and perhaps not need all the lighter oil which we hope will be extracted from the seas around this island.

Let me now refer to one of the most recent Commission documents, one dated 27th November. Again I regret that I do not think this Paper is actually before the House. It has recently been released and is entitled Community Energy Policy Objectives for 1985. On page 2 that document states that it is the Community's commitment to find expression in the policies of the member States, and that these should be based on the guidelines adopted by the Community. To a substantial degree the Community interest coincides with national requirements because the benefit of greater self-sufficiency and economy in consumption are important for each of the member States.

My Lords, I apologise for going on for so long but I was interrupted a great deal at the beginning of my speech. I hope that the House will bear with me if I continue for a few minutes more. First, I wanted to say that that was the gist of what the Commission say in their latest document. What, therefore, I think the Commission are asking of Britain is by no means an act of charity. There is much in the proposed Community energy policy of direct interest to Britain, quite apart from indirect benefits from consequent progress elsewhere. First, the British coal industry will benefit from the political and financial guarantees which it can obtain. Secondly, further acceleration of the British nuclear effort could reduce the cost of energy to the British consumer. Thirdly, it could relax pressure on the balance of payments. Community finance—and this is important—could reduce the resource costs in these difficult times. Fourthly—I should have thought that this would be of interest to noble Lords opposite—Community finance could reduce dependence on private sources for the development of the North Sea and give the Government perhaps more room for manoeuvre in their relationship with the multi-national oil companies.

Finally, the existence of the Common Market should remove—I think this is right—obstacles to the diffusion of technology and the sharing of markets which can surely only assist the wish of the United Kingdom, and Scotland in particular, to build up a new industrial base when the revenues from North Sea oil become available. One further personal comment on the availability of Community funds: The document to which the noble Earl, Lord Lauderdale, referred was entitled Energy for Europe, Research and Development. There are various annexes. My Lords, if Community funds are to go into energy research and development I hope that a fair proportion will come to this country. One of our last energy debates in the European Parliament was concerned with coal gasification. My German colleagues were of course greatly interested in this because if one is to gasify coal it is easier to gasify lignite than other forms of coal as lower temperatures are required. In one of the most recent Resolutions of the European Parliament I agreed that we should include a request for Community funds to go to coal gasification research, but I added that this seemed like a piece of special pleading on the part of my German friends. I further said that if larger Community funds were to go into energy research and development in member States we should in addition to coal research also consider other alternative sources: various forms of atomic energy research, research and development of solar power, of geo-thermal and even perhaps the kind of wave power on which important research work is now being done at Edinburgh University.

I am certain that we must co-operate also on deeper sea technologies, for these are very costly. Therefore, if following my German colleagues' Resolution, which was adopted by the European Parliament on 15th November, Community funds are indeed to be made available, then they should also go into the other kinds of energy research which I have mentioned.

My Lords, I apologise for keeping the House for rather a long time, but I wanted to report the latest information which I had myself received from Brussels; and I beg all those concerned to see that, in a debate such as this, the most up-to-date Commission documents are made available to your Lordships.

5.0 p.m.

Lord WYNNE-JONES

My Lords, we are all very much obliged to the noble Earl, Lord Lauderdale, for introducing this important debate concerning these European Instruments and the Report of the sub-committee. The noble Earl, Lord Bessborough, has put forward a rather strong defence of the Community. It had not been my intention to say very much about the Community, but there are some matters which the noble Earl has raised to which I think a reply is needed. He has mentioned that the Community have removed barriers to the transfer of tech- nology and research from one country to another. They may have done: but it surprised me, my Lords, when I was over in Brussels three weeks ago seeing the Commission on this particular matter, that when I asked them if they had any knowledge of what was done by CCMS under NATO they said, "No, we are not allowed to talk to NATO". Although NATO are working in the same City of Brussels, there is a barrier between the Community and NATO; and, although NATO have extremely important and interesting projects upon geo-thermal energy and upon solar energy which they have been developing for some time, and although some of this work is being done in America, with which the EEC has no direct contact but NATO does, yet the EEC apparently has no contact with NATO on these important matters.

My Lords, if we really are pretending that we are setting up a united Europe, surely it is time we got rid of this sort of nonsense. One of my criticisms when we were discussing the European Community two or three years ago was just this point, that it seemed to me that it was essentially a Zollverein; it was not something which Was concerned with those important matters of the trade in ideas and communication between countries, and if it is not going to do this then I think it is going to fail entirely. I would suggest to the noble Earl that he should use all the influence he can in order to try to get the European Community to get rid of the barriers which it itself seems to have created. I do not want to press this matter any further, but it was because the noble Earl raised it that I felt it was important to call attention to it.

My Lords, the Community policy with regard to fuel is a direct result of the oil crisis, and on this we have had two or three different statements. The noble Earl has told us that there is a more recent one which makes a slight modification (but not, from what he said, any substantial modification) in the policy. What is the policy based on? It is based essentially upon, first of all, the idea that oil imports should be reduced to 40 per cent. of the total energy used in Europe. That is the first point. At the present time it is 60 per cent, and they intend to reduce it to 40 per cent. The second point is that they do not want gas used except as a premium fuel. They want natural gas to be used only as a premium fuel—that is to say, not for producing electricity—and that is one of the directives which they recently put forward. The third point is that they do not consider that they can do more than hold coal production at best; and therefore they come to the final point (which, in my opinion, is not based on any rational consideration, but is merely the fact that, having done a sum and having put down three items, you are left with a difference) which is that that difference has to be met by nuclear energy.

My Lords, we at the sub-committee tried to find out what were the grounds for this decision. Those of us who went with the Parliamentary and Scientific Committee to Brussels tried to find out from the Commission themselves what evidence they had to indicate that they could do this. Frankly, I must say that they have not produced any evidence at all that they can reach the targets which they have set. This is a grave and serious matter, because it looks very nice to draw up a table—we have all seen the tables; I am surrounded here by masses of them —and the tables look beautiful. The moment you have typed out a figure, you believe it yourself: when it is printed, everyone else believes it. Really, a figure which is inaccurate in the first place is not improved one little bit by being put into print; and one wants to notice that these figures are, in my opinion, guesswork. Now the guesswork is enormous; the extrapolation is fantastic. At the present time I think I am right in saying that the total production for the whole of Europe in nuclear energy is 16 gigawatts, and they are proposing 200 in 1985. A gigawatt is approximately one large station, and therefore they are pro posing to build 200 large nuclear stations by 1985. How long does it take to build a station? I should not like——

The Earl of BESSBOROUGH

My Lords, would the noble Lord say how many stations the French are going to build? The number is quite considerable, is it not?

Lord WYNNE-JONES

My Lords, I have given the overall figure for Europe. I do not regard the French as being any more accurate in these estimates than the rest of the Community, but their figure is 77, I think. If I may take what the American Committee, the Sub-Committee of Energy of the House of Representatives, reported at the beginning of this year, referring to nuclear stations they said that from eight to ten years are now required, in comparison with perhaps six years for a conventional power station of the same size. As to causes of delay—and this is in America, and they are the very ones which are being copied by France; furthermore, the Americans have never built a gigawatt station based on the light water reactor, so they have not even got experience of it—they say that the causes of delay include shortages of trained manpower and manufacturing facilities, shortages of materials and the time for lengthy regulatory processes. We start in 1975, and we say that we can overcome all these and, by 1985, we shall have 200 stations of that capacity built in Europe, of a type which has not yet been built anywhere in the world. My Lords, we are living in a world of mythology; we are living in an imaginary world, if we think this can be done. I do not say that they will not build stations: of course they will. But if they succeed in building 200 gigawatt stations by 1985 it will be a miracle; yet they are basing their whole policy on this. If one looks at most of the estimates that are made one sees that they are of a different character.

This, to me, is the alarming thing about the document proposed by the Community. I have in front of me another Community document but this consists of statements of the actual consumption of different forms of fuel for every five years from 1950 up to the present time. Then it gives an estimate of what would happen in 1975 and an estimate of what would happen in 1985. These are not based on the same type of calculation that the Community has now used; these are estimates taking what is being done at the present time and asking what it is reasonable to think would be done in five years' time and so on. The estimate for 1985 for nuclear energy was that out of a total of 1,810 million tons of oil equivalent—which is the figure that the noble Earl quoted earlier—there was to be 175 million tons for nuclear energy. That is now up to over 200 million tons. At the same time the total was reduced from 1,810 million tons, first of all, to 1,575 million tons; then they found that they had not reduced it enough, so, suddenly, between the summer and now it is reduced by another 100 million tons.

How is this done? It is done merely by people saying, "Look, unless we consume less energy, we shall be in a pickle. Therefore let us write down a figure."So they write down a figure, first of all, of 1,574. It is now 1,475, an 18 per cent. reduction of the original forecast. In my opinion this is not the way to do this sort of estimating and calculation. I think that this has been worked out in the wrong way. Looking at the Report I should say that what happened was that they were first told, "This is what you have to aim at. Now find a way of satisfying that." So a lot of calculation was done to produce these results.

This figure of 200 gigawatts of electrical energy by 1985 compares with the figure for this country of 44 gigawatts by 1985. That means to say that Europe—that is, France, Germany, Italy and Benelux; for that is what it comes to since Ireland, is not going to contribute very much, and Denmark may contribute one or possibly two stations but no more—must each produce over the next ten years something like 50 per cent. more than we are to produce. This is a vast programme and I think that it is a dangerous programme. It is a dangerous programme because I do not think that they, or any others, yet know how they will manage to dispose of the products. In addition to that, no one knows what trouble we are going to run into over the importation of uranium. I think the noble Earl, Lord Lauderdale, will confirm that when this matter was mentioned at Brussels, a somewhat airy reply was given that there was about 4,000 times as much uranium in the sea as at present in all the deposits. There is also probably something like 100 to 1,000 times as much gold in the sea as under the ground; but to win a metal from a state of solution, a very dilute state of solution, is a very expensive and troublesome process.

I believe that Europe must go ahead and plan its programme. But I think Europe has made an error in what it is doing. I think myself that we have the opportunity of doing something better and that if we depart from our present course it will be fatal. Undoubtedly the best thing that we can do is to put the heaviest investment into coal; there is no question about that. We are already producing more coal than the rest of Europe. According to the estimates that have been given, we shall be producing more than 60 per cent. of all the coal of Western Europe; and the oil and the gas will run out very early in the 21st century, while coal will not reach its maximum of consumption (which will be far higher than that of oil) before the middle of the 22nd century. So we are all batting on a very much safer wicket in playing coal than we are in going for these other things. We should not neglect nuclear energy; we must go ahead with it. But we all hope that we shall not be using in the long term the methods we are using today, because no one can predict how to deal with the residues of what are produced today. Therefore this must be a short term policy, and this is all that we are concerned with at the present time; we are not talking about a long term policy.

My Lords, the noble Earl, Lord Bessborough, referred to the research done in this country into coal gasification. I would ask him to press especially that we have at the present time available in this country probably the finest teams of people anywhere in the world on research and development with regard to coal and coal products. The future is in that field and it would be a fatal mistake if we were to switch from the sort of policy on which we have now started to follow the policy proposed in this Community energy document.

5.18 p.m.

Lord KINGS NORTON

My Lords, may I begin by saying how wholeheartedly I agree with what the noble Lord, Lord Wynne-Jones, has been saying. I had intended to address a few remarks to your Lordships on the subject of nuclear energy in the particular context of the Report we are now considering but I think that the noble Lord has put the case so well that it is unnecessary for me to try to emphasise it. I should like, therefore, briefly to address your Lordships on one small front, on a matter which has been mentioned three times already this afternoon, first, by the noble Earl, Lord Lauderdale; secondly, by the noble Lord, Lord Lloyd of Kilgerran, and then by the noble Earl, Lord Bessborough—the subject of methanol. We mentioned methanol specifically in the Fifth Report of the last Session rather critically and we suggested it had not been considered by the Commission in the way we believe it ought to have been considered. I gather now from what the noble Earl, Lord Bessborough, has said, that perhaps some consideration is being given to it.

He said—and I hope that I quote him correctly—that methanol "cannot solve the primary problem". Of course it cannot. None of the things that we have mentioned today—nuclear power, coal or oil or hydropower—can solve the primary problem, which will be solved by a combination of efforts in various fields. I believe that methanol or something of that character can make a big contribution.

It is probably unnecessary, but I wrote down what was stated in the communication from the Commission to the Council as being the main objective of their paper. It was: … to reduce the dependence on other parts of the world by increasing nuclear power generation, maintaining coal output and reducing reliance on imported oil. It is particularly in that context that I am going to say a little about the methanol problem.

In power generation, coal, natural gas and nuclear energy can be used instead of oil; but in transport none of these can be readily used instead of oil. From the documents which the sub-committee have seen the Commission do not appear to have considered the possibilities of creating, from sources indigenous to Europe, fuels which could be used instead of petrol. If the EEC countries are, to use the Commission's phrase, to "reduce reliance on imported oil", it would appear to be a matter of major importance to consider the possibilities of making fuels alternative to oil. We have long known how to make oil from coal, though it has not seemed economic to us here in Britain to do it. I suppose the best known plant now making oil from coal is the so-called sasol plant in South Africa; but there coal is relatively cheap and I think they maintain the plant for defence reasons as well. But there are other ways of synthesising oil and there are other alternatives to petrol which can be made. The best known and the one specifically mentioned in the Report is methanol.

There is no doubt, my Lords, that with very little adaptation the modern automobile engine could run on methanol. With present tank sizes, we should have to call about twice as often at the filling station because the calorific value of methanol per volume is about half that of petrol. Alternatively, we might have larger tanks, but a perfectly feasible vehicle could run on methanol. This liquid fuel can be made in a variety of ways. It could be made in this country from coal or natural gas, but I quite agree that that might not in the immediate future be the right thing to do because there are strong competitive uses for these fuels and I suppose I should have to agree that, in the very short term, I do not think the prospects of getting methanol in any quantities in this country are particularly bright; but the pros and cons need urgent and expert investigation. In Europe, the situation is a little different. I believe that the Germans are already considering the manufacture of methanol from the large deposits of brown coal, or lignite, which they have and it seems to me that there should be a possibility of the EEC countries collaborating to produce methanol, in quantity if possible, from this source which, if it is not indigenous to the United Kingdom is indigenous to Europe—the great brown coal deposits of Germany.

In the longer term—and the penultimate paragraph of the Report of the subcommittee emphasises the importance of long-term alternative sources of energy supply—while we have no brown coal, we have a great deal of limestone and one can make methanol from limestone and hydrogen. We should have to have a more economic source of hydrogen than we have at present, but I think that it would be worth considering very carefully indeed whether a long-term supply of a fuel alternative to petrol could be found from limestone and sufficiently economically produced hydrogen. It is likely to be expensive, however one makes it, but at least it could be made here and I suggest that that is an extremely important reason for giving it serious consideration, because it would not only mean that while we were importing oil we could import less, but also that when we were exporting oil we could export more than we should otherwise have done and so benefit our balance of payments that much more. Therefore, my Lords, I believe, and I know that the sub-committee agreed, that we should study seriously and urgently the possibilities of making methanol and other alternatives to petrol and, indeed, of synthesising petrol itself not only in this country, but in collaboration with the other countries of the Community. I should like to know whether the Government agree with that general view.

As I said, I was going to say a few words about nuclear energy, but I think that the noble Lord, Lord Wynne-Jones, has made that more or less unnecessary, though I emphasise my agreement with what he said. As he said, and as I have argued several times in this House, there is a very severe built-in problem of safe disposal of nuclear waste. Disposal on the scale which is implicit in the present targets of the Commission would be a problem of the first magnitude and must be a serious barrier to the development of a nuclear energy power station construction programme until we have achieved control of nuclear fusion. So I think, with the noble Lord, Lord Wynne-Jones, that we must proceed much more cautiously than the Commission appear to wish to do.

Moreover, the noble Lord mentioned the difficulties of achieving the 1985 targets but, when one reads—and I think that the sub-committee mentioned this in its report—that the target for the end of the century is to rely for 50 per cent. of EEC energy on nuclear power, one is staggered by such a stupendous programme and one wonders whether it can ever possibly be realistic. I think that we shall have to trim the nuclear power station programme and shall have to trim it severely, and that we shall have to depend more on conventional sources of energy, augmented by, I hope, the manufacture of synthetic fuels and—though they cannot give us much—so far as they can help by the wind, the tides, the waves and the sun.

5.28 p.m.

Lord LEE of NEWTON

My Lords, I believe that the House should be indebted to the noble Earl, Lord Lauderdale, for the detailed manner in which he reviewed the communication which the sub-committee received from the EEC. It seems to me that one of the problems he had and one of the anxieties that he was trying to convey to us was the feeling that the Government have not made any statement about whether or not they were to retain control of Britain's own energy reserves. As a matter of fact, I shared the noble Earl's apprehensions until I read the Statement made by my right honourable friend the Secretary of State for Energy in another place last week. I felt much more relaxed after I had read it. The Secretary of State said: I am in full agreement with those who say that it is essential that the United Kingdom should continue to exercise full rights and control over these resources, because when it comes to such vital matters as exploration, depiction, disposal and taxation policies it is right that we should decide these in this House. I accept that these matters must remain in the hands of the British Government. A little later, the Secretary of State confirmed that: We see the EEC energy policy at most as the harmonisation of national policies, with control exercised by national Governments."—[OFFICIAL RFPORT (Commons), 3/12/74; col. 1513.] My Lords, that was a most vital statement and one which I certainly welcome and it can permit us to look more at the policies outlined in the Document R 1472/74 with that great fear out of our way.

As has been said, the policy statement aims at a 50 per cent. nuclear power contribution and a 30 per cent. national gas contribution by the end of the century, leaving some 20 per cent. for coal and oil. Quite frankly, I cannot see how that can harmonise with the present objectives which we have in this country. It seems to me that by that time we shall be hoping for a very large increase in our oil supply from our own resources and we are now, as I understand it, to step up our efforts to increase the capacity of our coal industry. I do not wish to convey the impression that I am opposing planning. I am all in favour of planning our energy supplies, though in the White Paper that I produced in 1965 I confined myself to what might be considered the rather parochial aspects of one nation planning for five years ahead. Here we are expected to believe that we have the "bones" of a planning document for nine nations looking 25 years ahead. If I may say so, I found it quite sufficient to have to look even five years ahead—and if I might be allowed to put in a "plug" for my own Paper, I got it right. The coal equivalent for 1970 was 324 million tons, which is precisely what we burned, and indeed I got the coal almost right. Strangely enough, the one that went wrong was nuclear energy.

I had intended to make many of the points that were made by my noble friend Lord Wynne-Jones. Perhaps I was a little biased—I was relying heavily on the AGRs, which encountered the same snag as every reactor system that I have heard of seems to have encountered. Therefore, my noble friend was absolutely right. He talked about the technology gap, but I would describe it as the credibility gap. It seems to me fantastic that we are seriously asked to believe that in the next few years the nations will agree on the types of reactor programmes that will solve the problems of waste disposal and supplies of uranium. Indeed, one of the issues which will determine cost is whether we can agree on the life of a nuclear reactor. At one time, 20 years was deemed to be the maximum, but many of us felt that a reactor could go beyond that. Certainly it has a very remarkable effect on the costing if you can go further than that 20-year period which we then accepted.

I listened with interest to the noble Earl, Lord Bessborough, but I wondered which paper we were debating when I listened to him. He mentioned four papers that I have never seen, all of which were supposed in some way or other to change certain aspects of the paper we are debating. My noble friend Lord Balogh, who confided that he had seen those papers, also said that they made no essential difference at all to the policy content of the paper which we are debating. So we must assume, in our ignorance, not having seen these other papers, that the content of the Paper R/1472/74 is still broadly the policy upon which the EEC intends to embark. I must say that I doubt not only our capacity to produce power stations at the pace mentioned by my noble friend, but whether we could get common agreement on any of the things which flow from a decision about the kind of reactor programme which is required.

Turning to natural gas, again we are asked to believe that by the end of the century we can rely for 30 per cent. of our energy supplies on natural gas. I have discussed natural gas with a great many fuel scientists. They all agree that it will be the first of the fuels to run out. We have, of course, great finds in Groningen upon which much of this forecast is based, and we have the finds in the North Sea, but we are now going to increase the pace of exhaustion of those finds. I remember Professor Schumacher arguing that there will be no natural gas left by the end of the century. We have since found some in other parts of the world, but the rate of exhaustion is probably higher now that the rate of new finds. One can look around and say, "There may well be alternative sources", and one of the sources we were tapping even before we had North Sea gas was Algeria. We had a long-term contract for importing Algerian methane, which I take it is still a valid contract. We were looking at the idea of importing from Nigeria, which also has great reserves of natural gas.

But we are now in a situation where a huge part of the world is starved of oil because of the pric—and I am thinking of the Third World itself—and where nations such as Nigeria and Algeria will be looking far more to assisting the Third World nations than the comparatively prosperous nations of Western Europe. So I should have thought that, instead of having an expectation of 30 per cent. of our energy coming from natural gas, we might not be able to get the imports we need. It is also quite probable that much of our own North Sea gas, and indeed the finds in Groningen, may well be running out quite quickly. I hear that the Germans are importing from the Soviet Union. We are trying to get safe fuel. Will anybody suggest to me that this is a way to get safe fuel—by relying on a nation which may well think in political, rather than in economic, terms of supply? However, I do not wish to take up too much time. My noble friend made certain points concerning atomic energy which I felt were right, and which confirmed what I wanted to say.

Turning to coal, we in this nation preserve more of our coal potential than any of the Continental nations. Indeed, in the White Paper which I keep plugging—and this was forecasting in 1965—I hoped that by 1970 we should have 170 to 180 million tons of coal. In fact, in 1970 we burned 163 million tons, so I was not far off. Unfortunately, another White Paper decimated that and we got down to 130 million tons. Now we shall be lucky if we get 115 or 116 million tons this year. I understand that the National Coal Board intend to increase that to some 150 million tons per annum, which I think is a very proper programme upon which to embark. Looking at paragraph 6 on page 19 of the Report, one sees that they describe coal as a stopgap. This is a foolish attitude for people who are forecasting so far ahead. It is the only fuel on which they will be able to rely by the end of the century, with the exception of the oil which they wish to discourage. It seems to me that one of the problems which the Community are trying to solve is how you get a certain quantity of energy without going in for more of the coal which they still have in Western Europe.

Under these conditions, I really cannot believe that the British Government could possibly accept any part of the kind of Report which the House is now engaged in discussing. Indeed, let us take in the Report itself. First of all, in 1973 they were basing themselves on 227 million tons of solid fuel, falling by 1985 to 175 million tons, or 10 per cent. Then, because of the oil problem, that was immediately increased to 250 million tons, or 16 per cent. When the real "guts" of the case came to them, and the problems of oil struck them in 1973, what did they do immediately? They increased their demands on coal; yet by the end of the century we are asked to believe that coal will be looked on purely as a stop-gap for the production of electricity.

I was very relieved by the Statement of the Secretary of State in another place. I trust that the Prime Minister, who today is discussing these matters in Paris, will make it clear that we have not embarked upon this huge programme to supply ourselves with oil, coal and the natural gas in order to throw it away on people who do not propose to make any real effort to produce their own energy. I do not wish to nag. I am all for economic and industrial co-operation. I advocated this at Strasbourg as long ago as 1949, when we first began. I want to see it now, but to believe that this nation could go along with the type of policies adumbrated in the communication we are now discussing is wrong. It would be fatal. We would be quite unsure of where to go once it was clear that nuclear energy would not produce the 50 per cent. upon which the Paper is based. By that time we would be too late to be able to expand our coal production, and, therefore, there would be terrible suffering and degradation throughout the United Kingdom.

5.42 p.m.

Lord MACLEOD OF FUINARY

My Lords, as I understand it, this House is taking note of the Fifth Report of the Select Committee on A new Energy Policy Strategy for the European Communities, and this new energy policy strategy is contained in a communication from the Commission of the EEC to the Council of Ministers. Again, as I understand it, ultimately, unless some instruction comes from the British Parliament to our representative on the Council, then the new strategy policy may become the law of the Community and nationally binding upon us.

My interest is to see that certain aspects of the proposed present policy should not become binding on us. I do not intend to address your Lordships at any length. May I, for the sake of brevity and clarity, summarise my objection in a sentence and express it under two heads. In due time, I shall be asking this House to object to the control of nuclear power being shared with other nations, either with regard to civilian energy or military energy. As your Lordships are aware, the present proposition is that a Community agency should be established having a legal personality and financial autonomy, under the control of the Commission. One of the results will be a considerable increase of nuclear energy to be activated by 1985, as has been explained by several speakers.

My objection under the civilian head is not hypothetical. Only last week in France we read in the newspapers of a container of uranium ore which was split open on a train; the powder leaked out and for two and a half miles the track was contaminated. More by luck than good guidance, no great tragedy has occurred as a result of that.

However, as has already been explained so well by my noble friend Lord Wynne-Jones by 1985 vast events are to take place. If I may cut down his figure to relate them to France only, already France plans 50 nuclear power stations grouped in 30 atomic parks to produce 70 per cent. of the electricity in France. Again, already a giant factory is being constructed with one of the fuels, enriched uranium, being produced. This coming year, the "Superfenix" factory is being established in France, which is going to produce plutonium in vast quantities. As all of us know, all that is made in these places will have to travel by train or motor car from place to place. The result, in tens of thousands of cases of lung cancer, is sufficient for us to say that we must keep control at the civil point.

My only other heading is as follows: nor should we hand to others control of nuclear power for military purposes. Already we must agree, surely, that nuclear proliferation for military possibilities is getting out of hand. It was on 6th August 1945, that the first bomb was dropped at Hiroshima. In view of the fact that this House is never opened except by Christian prayer, may I be allowed this very short reference to what the Christian faith is. Augustine gave us his definition of God when he said that God is an infinite circle whose centre is everywhere and whose circumference is nowhere". The obvious Christiain claim is that this is revealed in the person of Christ.

The greatest discovery that has been made in this century in the scientific world is that there is no such thing as dead matter. The ultimate form of matter is light energy. Unless the whole Christian claim is simply a piece of poetry, this is terrifying, because Christ is not just the light of the Church, he is the light of the world and he is the life of the world. This is further fulfilled poetically in the story of the Transfiguration, which I shall not repeat, except to say that Christ became translucent. As I said, it was on 6th August that we dropped the bomb at Hiroshima; that is the day of the feast of the Transfigura- tion; it was a pity that we chose that day to take the body of Christ and use it for bloody hell. I am speaking as accurately as I can. This is the area in which there should be protest, at least by the Church.

I know that President Truman spoke at about the time of the dropping of the bomb. I believe he spoke completely sincerely when he said he allowed this terrible thing because it was bound to teach the nations of the earth other ways of settling their international disputes. I believe he was sincere, but we are agreed that that has not happened. Now it is the "balance of power", and the same America has locked up in cupboards nuclear power for military purposes equal to one Hiroshima bomb dropped every day for the next 170 years. Russia, we are always being told, is slightly ahead of that, because it is the "way you keep the peace". Seven years ago China was spending £7 million on nuclear research for warlike purposes and last year she spent £600 million on nuclear research for warlike purposes. It is the "way you keep the peace". Now that China has got it, of course India must have it. Very recently we have had President Bhutto of Pakistan saying, "The people of Pakistan are ready to offer any sacrifice (even to eat grass) to ensure nuclear parity with India." Then Egypt recently declared that she had nuclear power. We have had the Shah of Iran even more recently stating that "If more nations arm themselves with nuclear weapons Iran will seek possession of them sooner than you think". Why not? It is "the way you keep the peace". It came out last week that Israel now has it. France has had a centre—presumably a secret one—since the 1950s in the deserts of Palestine. This is getting out of hand.

To summarise and close, there is the obvious situation in which the then President of the United States of America little more than a year ago, arranged that the nuclear Powers in Scottish waters should be put on the alert so far as I know without consulting us at all. It was certainly in December of last year that the then President was asked by two congressmen as to what the position was with Russia. He said, "I have only got to go over to that phone, pick it up, and in half an hour 70 million people will be dead." That is one of the reasons why we dare not become sharers with others in the control of nuclear power. Do not let us dismiss this as just impracticable pacifist poppycock. My last quotation, and my last word, is that of Sir Basil Liddell Hart, the well-known correspondent, until two and a half years ago, of The Times, and the best known war correspondent. I have quoted this before in this House, and I may well quote it again. Here is the war correspondent saying: The A bomb makes nonsense of the aims of pursuing victory in a total war. The term ' pursuing victory' becomes totally absurd. Anyone who dreams or talks of ' winning the war' is worse than absurd—a menace to his country and to all humanity ". We are spending thousands of millions of pounds for something which nobody can win. He goes on: To make non-violent resistance a national affair will be an extremely difficult task. Probably the most important thing is to educate people and convince them that it is a workable policy. He ends: The more Governments realise their incapacity for military defence, the more they will begin to take non-violent civilian defence seriously. Here we have the words of the best known war correspondent in the past decades in our country. In the light of this, do not let us get mixed up in sharing nuclear power for military purposes.

5.52 p.m.

Lord ORR-EWING

My Lords, I am very happy to follow the noble Lord, Lord Macleod of Fuinary, on a discussion on nuclear power. I have taken a special interest in this matter, both in my capacity for seven years as a junior Defence Minister in another place, and also because by sheer luck, or perhaps guidance from an intelligent tutor, I took my degree in nuclear physics at Oxford. It is a long subject and I take a different view. I think it is the balance of terror which has forced some of the big Powers to concentrate on conventional arms and, perhaps, more so on subversive warfare to achieve their objects.

I cannot help wondering whether the new form of World War 3 will be in the field of subversion because the balance of terror is so frightful that no nation—not even, I hope, a small one—would contemplate taking that risk. I do not think the dropping of the bomb—however terrible that was—can be thought of as a crime. It shortened the war and saved an immense number of lives. One is fooling oneself if one thinks that research would have stopped if the bomb had not been dropped. It might have been slowed by a year or two, but I believe each independent nation would have gone ahead with its own nuclear research and development. What the statesmen of the world have to do—and, indeed, so many have tried to do this—it to slow the proliferation of nuclear weapons to the maximum extent because the greater the proliferation, the greater the risk of accident or misjudgment. I do not want to disassociate myself from the religious background so ably put by the previous speaker.

We are looking at an expansion of energy needs of the EEC which the Fifth Report of the Committee of which I was proud to be a member, estimates at over 50 per cent. in the next 12 years ending in 1985. I believe that this is unrealistic. I do not believe the nations of Europe and we in particular will have the capital resources or resolution to expand our sources of energy at that rate. In this forecast, solid fuel is to be expanded by 10 per cent. throughout Western Europe. As was wisely said by a previous speaker, this will be largely as a result of the United Kingdom and Germany. I can only say that with troubles in the mining industry, and, particularly, with the National Union of Mineworkers, it looks as if our output this year will not meet the fairly modest target that was set of 140 million tons, despite the immense investment of capital in that industry by successive Governments.

In oil, generally, an expansion of 7 per cent. is expected. In natural gas output is to be expanded by 200 per cent. According to the forecast we are to treble the output in natural gas. I hope that this is possible; it certainly needs the least amount of capital equipment, but, as the noble Lord, Lord Lee of Newton, said, this may not be feasible. I am not in a position to comment on the 15 per cent. expansion in hydro-electric energy. In nuclear energy the most ambitious targets are set for Western Europe. Nearly 19 times as much nuclear energy is to be available for Western Europe, ourselves included, within 12 years. It takes about seven years to put a new nuclear power station into operation. I see that the noble Lord, Lord Balogh, suggests 10 years; that makes my case even more forceful. Certainly it takes between seven and 10 years, and 10 years is a better figure bearing in mind the problems we had with the advanced gas cooled reactor in this country. I hope that will be pessimistic for the future, I should like to see a shorter time. I do not believe Western Europe will expand 19 times their output of nuclear energy from the new nuclear power stations.

I do not want to concentrate on the overall plan because we have no control over what Western Germany or other nations will do. Admittedly we need an overall authority, but we have minimal control. We in this country are really most concerned with the nuclear power programme and with the North Sea programme. I hope that noble Lords will forgive me if I therefore concentrate on those two programmes. It costs approximately between £300 million and £400 million to build a new nuclear power station and it takes from seven to 10 years. I am not sure when our AGCs come on-stream; there is still some doubt as to the exact time. It means another huge programme on top of the announced programme, which I support entirely, of Her Majesty's Government. It is a very big investment by this country in nuclear power stations, and I doubt whether we could carry our share.

One remembers France has taken a very ambitious view on nuclear power stations and has recently taken an order to export five to Iran, and no doubt will accept orders for other places. It is not just nuclear power stations for Western Europe; it is for Western Europe and for export as well. I doubt whether this is a realistic programme.

In the matter of the North Sea I was delighted—and the quotation has been made several times in this House—that M. Simonet at his lecture at Oxford said that the United Kingdom would always retain full sovereign rights. This needs to be said loud and clear several times because there are those who sincerely doubt it. I believe Her Majesty's Government are in danger of handicapping the realisation of the North Sea by the time-scale which has been set. They are to set up a British National Oil Corporation in accordance with their Election plans. No single person on this side of the House is likely to change their minds on that. I would urge them to keep this to a small number of expert people. I hope that Parkinson's Law is not allowed to operate in this field. The number of people who will be able to lend their expertise is only small, and there is a danger once you start a national corporation of this sort, that it mushrooms into a great organisation of clerks, secretaries and the like, all of whom will be dependent on the nucleus of knowledge of the top people.

I would urge that the Government retain the right to pay those top people the going rate for the expertise for which they need to have aid to command. It is rather like the pilots of the Jumbo 747s; I do not think it is a very fair comment that they should be paid the same as those in the United States. But in this area of undersea oil particularly at the depths which we are now reaching most of the expertise is international expertise and much of it rests with United States personnel. We will therefore have to pay the rate for the job if we are to attract back British nationals to man up the British National Oil Corporation.

On capital investment I know at the moment of, and I have seen, two estimates—the lowest is that £500 million is going into capital investment in North Sea oil every year, and the other estimate was of £1,000 million. This is an enormous load for any series of companies however strong they are, however multinational. The Shell Company is currently putting £1 million each day of capital investment into the North Sea and even Shell and companies of that size are not free of the problems which everyone of us has in our industrial life of cash flow.

So I urge on the Government: please do not set your taxation too high. Make it flexible and do not make it swingeing, because if you do this oil plan will not come to fruition. Capital investment will not continue at the rate which is necessary. It is proposed that the North Sea oil companies, to encourage them, can charge 50 per cent. more than the cost of plant they are putting in. This seems an admirable idea in principle. But I hope the Government will note that that is very much more helpful to the large companies which are making large profits than it is to the smaller companies which are making marginal profits. If it is very important to get this on-stream at the earliest moment, then both large and small need to play a part.

Finally, have the Government looked to see the manner in which South Africa taxes her gold mines? They relate the taxation to the gross margin in each individual mine. This seems to me the sort of yardstick which should be used in suggesting what taxation should be applied in various parts of the North Sea. Where it is easy, and there is vast production people should pay a higher rate of tax than when it is less easy and where production is not so immense. I think that this principle should be applied to oil wells.

There is another smaller point of taxation. I understand that the present proposal is that the Minister will have to rule what constitutes an individual oilfield. I feel desperately sorry for the Minister if he really has this responsibility. It will be a very difficult judgment. When you have a production platform there, or an exploration platform, it is very difficult to make a hard ruling whether the oil is coming from a neighbouring geological structure or from your own. I would urge the Minister to get out of this responsibility, or he will be up against a large number of international geological oil experts who may well challenge his judgment or ruling.

My final point is: please do not impose swingeing taxation as has so recently happened in Norway. Norway heard, I think as a result of speeches made in the General Election campaign, that this Government of the United Kingdom is going to take 90 per cent. of all profits which the companies derive. As a result, big multinational companies are in danger of applying no more effort to Norway and of going elsewhere to make their profits. We must not set out taxation targets as high as this. We shall get the co-operation only if reasonable taxation is levied on the efforts they make. I hope, therefore, that the Government will take notice of these general ideas. If not, we as a nation are not going to realise our plans for extending North Sea production which is so essential to us and equally essential to the EEC.

6.5 p.m.

Lord DAVIES of LEEK

My Lords, as always I listened with interest to the noble Lord who has just sat down because of his constructive and workmanlike approach he brings to these problems. I do not want to enter into any cut and thrust this evening, but I want to ask why we are having this debate. What is the purpose of this debate? On another occasion when I get the opportunity, having made a study for 30 years of the dangers of radio-activity, we will talk about it. Only this week we heard about a lorry driver driving radio-active waste material and he was 200 times above the safety level but knew nothing about it. But that is not why we are having this debate. We are having the debate because the Select Committee did its duty. When we nominated this Select Committee we gave it the duty to consider Community proposals, whether in draft or otherwise and to draw the attention of the House to them. Page iv of the Fifth Report states: The Sub-Committee believes the question of United Kingdom sovereignty over its indigenous resources to be one of paramount importance, not least when the immediate and potential resources of coal, oil and natural gas in and around the United Kingdom exceed most, if not all of those of the other Member States. That is the 64,000 dollar question to be looked at tonight. The nation is engaged on losing its sovereignty and that exercise is growing.

In 1962 we put down five safeguards for entering the Common Market; whether people have retreated I am not concerned. We said, first, there should be strong and binding safeguards for trade and other interests of our friends and partners in the Commonwealth—and they were friends and partners when we needed comfort and succour and stood alone in the fight against Nazism. Secondly, we wanted freedom to pursue our own foreign policy. With Dr. Kissinger entering the field, that has almost gone. Thirdly, we wanted fulfilment of the Government's pledge to our associates in the European Free Trade Area. We have forgotten that pledge. Fourthly, there was the paramount right to plan our own economy. Fifthly, we asked for guarantees to safeguard the position of British agriculture. I contend that this was brought to the House so that we could perform our Constitutional function. But worse than that our sovereignty is in danger.

The Select Committee drew our attention to the communication which states that the requisite support towards achieving these tasks could be assigned to a community agency—this is another group of hard-faced men in a bureaucratic setup, where members and representatives selected by Parliaments have no say at all. People can say, "Oh" and "Ah", but the fact is that this is not a democratic set up, and the Commission is of paramount importance and makes decisions with experts and a few groups of officials. It is no good regretting the fact that we have moved in and are now finding out the gains of moving in. This organisation would operate within the framework of policy definedby the Community's institutions—the word "institutions" is a hard, brittle one—things that are written on paper that have no space for manoeuvrability. You have things which are written in black and white. That is not the way to run human affairs. With the necessary financial means, it would be under the control of the Commission and would be assisted by a consultative committee.

We should be allowed to have a few consultants comprising representatives of member States and interested parties—industry, workers and consumers. The statement leaves unclear, as everything else is unclear, the form proposed for such a body—whether it is to be on the lines of the European Coal and Steel Community or some other advisory body. This will have to be fully explored by the United Kingdom Minister, for it may involve sovereignty.

We have been given figures in the Report (there has been a bigger and more accurate Report since), but they are "guesstimates" made with a slide rule and a calculus. They are not real figures. I will not enter into that question because both noble Lords who spoke on this side of the House made an excellent point. However, let us take a vital issue. We lost the American colonies because of prices. Lord North and the people he had around him took the same attitude towards America as some people take towards the European Economic Community today. They are demanding that the Community shall have a legal personality and financial autonomy. Even if the risk is minimal, we cannot divulge and disorganise prices. That cannot be allowed because it will lead to instability: of the market, and the Paper says that that cannot be tolerated; it would hinder the implementation of the objectives of the energy policy. So why pretend from all the statements here that energy a few years hence will be controlled by this Parliament? Energy is of paramount importance. Neither this House nor the other House will have final control over prices, ' and there is nobody in this Chamber who will contradict that after reading this Report. We are betraying what the British people believe that they have built up over centuries. America left us because her cry was "no taxation without representation". We shall have control of prices here without representation.

My Lords, I shall try to limit my speech to ten minutes and leave out the other points I wanted to make. Let me, however, ask a question. The Advisory Council on Energy Conservation is headed by Professor Sir William Hawthorne, CBE. It met for the first time in October, following the official appointment of an 18-strong team. Among the members are Sir Derek Ezra, Chairman of the National Coal Board, Dr. A. W. Pearce, Chairman of Esso Petroleum, and Sir Frederick Warner, a member of the Royal Commission on Environmental Pollution. It is being run along the lines of the United States Federal Energy Commission. Were those people consulted? Were they given the relevant documents from Brussels to discuss constructively the implications of this policy upon Britain's planned approach to energy? One of our safeguards was that we should have the right to plan our own economy.

I know something about coal. May I suggest that the one indigenous fuel that we have is coal. I said the other day that instead of taking miners for the next thirty years to dig a hole under the sea between France and Britain we should use the capital involved to employ miners to open up the new Selby colliery where we have a 500-year supply of coal. Soon we shall have no miners in Britain. My country is no longer sending boys to the pits. The men in the Scottish mining areas and in Durham are fine men and they have better opportunities than people like me had in the 1900s. When they obtain scholarships to go to university today they are not given a loan of £25 that they have to pay back later—as I did. This is a different kind of world. But we still want men to cut coal. We have got the coal, and instead of Britain talking gloomily we should pull up our socks and get down to the job in an attempt to put Britain on her feet again. Then we should do the things which traditionally we do well and build up a great Britain—not great in land ownership but great in its character.

According to the clock, there is one more minute left to me. This is supposed to be a wise group of people, but what do I find? I was delighted to hear my noble friend Lord Lee speak about them. They talk about security. Heavens above! What is wrong? Where will they get their natural gas from? His very words were that they are leaning heavily upon imports. Where are we told in the document that we are getting it from? We are getting it from Algeria, Norway, Russia and Iran. This makes a "monkey" out of NATO. It is just making a "monkey" out of our so-called defence system. For heaven's sake! let us face the fact that we have a small standing Army, and it is a good standing Army. We need defence, but energy links up with defence. Was there any consultation when the Common Market members discussed their energy policy with NATO? The answer is, No. They are two separate bodies.

My Lords, I have spoken one minute longer than ten. My point has been made. Therefore why should I reiterate the wise remarks about other subjects which have been uttered since I first began to listen to the debate today? All I will say is that the sooner Britain attends to its own house and thinks about the Common Market about 25 years hence, not just about a bunch of nations buying cheap and selling dear, the better. "The Six" are not Europe. We are a little Common Market. We want a Europe of all the nations. That, one day, is my ambition. It is an old-fashioned Zollverein that you are being led up the garden path to join.

6.18 p.m.

Viscount HANWORTH

My Lords, some years ago I received some very sound advice from our present Leader of the House, the noble Lord, Lord Shepherd. He said that whereas Front Bench speakers had to be prepared to speak on any subject, it did not behove Back-Benchers to speak unless they knew about it. Although I have a certain amount of technical background and went out recently to Brussels with the Parliamentary Scientific Committee, I am only too acutely aware that there are many areas in which I should have liked to do further research and look into the question in more detail. However, I hope that what I shall say will be of some use.

I have considered whether to depart from what I had intended to say but I think my speech is argued fairly tightly and stresses a number of the points which have already been made, although from a slightly different angle. First, my Lords, if there is any lesson that we can learn from the past, it is that no detailed energy policy or forecast has stood the test of time, particularly when based upon economic considerations. I believe, however, that certain factors and constraints are reasonably beyond doubt when considered in the short term, and it is wise to be quite clear at the outset what they are. We can also list the long-term possibilities and then make a reasonable estimate as to the earliest date upon which they might affect the issue.

Working on these lines, I believe that the only energy sources which will be of major importance—and I underline "major importance"—in the short term are coal, oil, natural gas and fusion reactors. We can forget for the moment the other possibilities such as solar power. Nevertheless, we must press forward research on the most promising of them and we must never forget that if fusion reactors became a practical possibility we might then wish that we had not committed too much capital investment upon other long-term lasting solutions. I certainly believe what other speakers have said—that somebody ought to look more carefully into the methanol solution for providing fuel for vehicles. I have a feeling that the "with it" thing is to talk about the hydrogen economy for the future, and it may well be that that is at least one remove away. We may have to use—and it will be better to use—a methanol or possibly benzol solution if we run into difficulties with regard to fuel for vehicles.

Ideally, I believe it would be best to make greater use of mined coal and conserve the smaller resources of fuel and natural gas, but being realistic it does not seem that this is a practical solution, either politically or economically. I am therefore afraid we may have to arrive at the conclusion that if we can maintain and slightly increase our present output, that is the best we can do. Let us, however, never lose sight of the possibility that if we could produce mined coal in quantity, reasonably cheaply, that would be by far the best solution since we have long-term reserves.

I therefore conclude that from the EEC point of view their concentration on increasing power obtained from fusion reactors is the only answer if they want to lessen their dependence on outside resources of oil. My impression is that although their reactor programme is probably impracticable, it is set as a target, and in spite of what has been said this evening I really do not see that there is much else they could recommend. I think this point has been made by other noble Lords. The Commission started with a requirement and said we have got to meet it, and therefore the answer is 150 (or whatever the figure is) reactors.

If, however, we look at this from a purely national and British angle it is probably not very attractive. It looks as though North Sea oil and gas will solve our problems by the 1980s and will last for some years. Although it is very expensive to win such oil, I should not think that the drain on investment resources, which this country now cannot afford, will be comparable with an all-out nuclear programme. Judged on a Community basis, I think it is understandable that they might hope that we will share some of these oil and gas resources if life in the Community becomes difficult. But, as I am going to emphasise in a minute, it is terribly important, as most other speakers have said, that we do not part with our sovereignty on this issue without some very strong factors in favour of doing so.

In other words, we must get something really substantial in return.

Also, do not let us forget that although it is fairly easy to transport oil and natural gas there is a very definite limit to the distance over which electrical power can be transported. Therefore one does not easily foresee vast quantities of electrical energy being brought into this country from the Continent. I know some people will say that it is already done; and so it is, but I am speaking about large quantities. If we were to allow our natural resources of oil and gas to be used up, I do not see any way in which Europe or the EEC could easily repay us in energy terms.

I am personally in favour of membership of the Common Market and I think, if necessary, we should go some distance towards falling in with their plans, but I would say "some distance" only, and then only in strict horse trading terms. If they really do want us to increase our nuclear programme, what about suggesting that they provide the capital for doing so at virtually no interest rates? This might benefit them and us. It would mean that there was in the Community more power—more energy—and equally it would provide employment here. That is what I mean by "horse trading ".

Having said all this, if we are to remain in the Community—and I hope we do—I would believe it to be a mistake which might later work to our disadvantage if we were to be wholly unco-operative. I think we must try to be reasonable; from what we have heard today about the EEC point of view and the statement that our sovereignty would be preserved in this matter, I think this is not unreasonable.

I do not think one can leave the subject of fission reactors without mentioning the safety and the disposal of waste products. Here again my views are based on a certain amount of information, but it is a very specialist subject. All I would say is that I have probably studied it a little more than some of the extreme protesters. I believe that there is a risk with a nuclear reactor; the question is whether that risk is acceptable. My own feeling is that it is acceptable. Philosophically in this uncertain world I think we must say that it is not only life alone that matters; it is also the quality of life. We have to make certain sacrifices and accept certain dangers in that respect.

I agree that the disposal of active waste is worrying, not so much on the short-term basis but possibly in the long-term for future generations. Nevertheless, if we do not foresee these reactors going on too long, I believe the problem can be dealt with and probably some means of disposing of it satisfactorily will ultimately be found by science. There is however another disturbing factor, and that is the possibility of sabotage or blackmail. I should like to have expert opinion on this point. However, I do not believe that it would be at all easy to create a major accident in a reactor without a good deal of preliminary and highly technical work in over-riding all the safety devices, and the biological shielding is quite bomb-proof. I think we must see this danger in the context of other, and what I believe are far greater, dangers in the nuclear field. It will not be very long before many of the smaller nations have the ability and stocks of plutonium necessary to build some atomic bombs. Moreover, large terrorist organisations might well steal sufficient plutonium for the purpose. Admittedly, the more reactors there are built, particularly breeder reactors, the easier it may be to acquire the plutonium. I nevertheless conclude that the size of the EEC reactor programme will not very greatly increase this danger, and I am afraid that in the years to come we shall have to face the possibility of atomic blackmail. If we deal with such threats with resolution, as I believe we shall have to, I do not rate those dangers too highly.

Finally, it seems to me it is a pity that the Commission have paid so little attention to the very great increase in the utilisation of energy which can be brought about by using low grade heat from power stations. This was mentioned in the House not long ago. The point is that if you take heat at a reasonable temperature it will lower the efficiency of the plant. However, taken overall most of the energy put in will be used. Whereas at the moment you are probably only getting 35 per cent. or so efficiency from a power station in terms of electrical output, you may well raise this to something like 80 per cent. or better if you can employ a low grade heat for such things as district heating or industrial processes. I should have thought that this is certainly something that the Community should stress, particularly with a programme which means siting many new power stations. No mention is made of a European grid system.

My Lords, I am not convinced—and again this is where I feel very short of technical knowledge—that the gasification of coal in situ is being investigated and pressed forward with sufficient energy. This could be enormously important in the future, if we find we cannot win our coal by the conventional methods.

6.30 p.m.

Lord STRATHCONA and MOUNT ROYAL

My Lords, there was a moment when the noble Lord, Lord Davies of Leek, rose to speak when I thought he was going to say that the whole of this debate had been quite unnecessary. But I discovered that he was launching into an impassioned attack on the whole concept of the Common Market. To that extent, he certainly agreed that our debate this evening is performing a useful purpose—even for him—in calling our attention to the dangers which he sees in the situation postulated by this Report.

Lord DAVIES of LEEK

My Lords, I thought that the entire debate would centre around the issue of the sovereignty of this House and the other one. That is why I concentrated on that issue. Consequently, I think it is an important debate.

Lord STRATHCONA and MOUNT ROYAL

My Lords, I am glad we agree that it is an important debate. I want to congratulate my noble friend Lord Lauderdale, if I may, not only for having initiated the debate, but for the remarkable way in which he summarised at least those documents which I have seen—and we all agree there are quite a number which some of us have not seen but which, perhaps, we should have. But I will come back to that point in a moment.

It seems to me that the Fifth Report and the document which the Fifth Report is discussing, which I call the study document, are dealing with two of the most important issues which confront us at this moment. The first important issue is our relationship with Europe, and the second is the very fundamental question of where we are going in our energy policy. I shall not try to follow all the many highly technical speeches made by noble Lords who have given us the benefit of their views this afternoon. Those views have been extremely valuable. However, we should address ourselves to what seems to me to be a rather fundamental matter; the procedural and political points which raise certain fundamental questions about how we make decisions, how communications are carried out between the EEC and this Parliament, and the whole issue of British Parliamentary control.

My Lords, the first question that this raises in my mind is this: what is the composition of the body which produced this Report? At the outset of the examination by the Committee of one of the Ministry witnesses, we find the Lord Chairman of the Select Committee saying: We are conscious of the fact that the energy policy strategy proposals are not those of your Department and, therefore, you have no responsibility at all for them". That strikes me as being an extraordinary situation. We have here a Paper setting out very far-reaching technical and policy guidelines for the future of our country. It even goes so far as to postulate the setting up of a new decision-making process by a new organisation. Yet, so far as I can discover, these conclusions and recommendations have been conjured up by a process which was once called "exalted brooding", a process that takes place without any consultation with the constituent members of the Community.

Under those circumstances, it is not surprising that the Select Committee Report says: Essential information of the possible energy contribution expected from each Member State is not included in the Communication, yet such would seem essential for consideration of the financial and physical resources needed. In preparing a document of this kind, would not one have expected that the initial input would have been the plans and projections of the individual member-States? I think in a way that this was the point that the noble Lord, Lord Wynne-Jones, was making. He was making a plea for starting from some fairly solid ground. I shall probably get my metaphors mixed, but the noble Earl, Lord Bessborough, said that we must regard many of these figures as targets. If one is to shoot at a target, one must first of all be able to see it. I think the noble Lord, Lord Wynne-Jones, was suggesting we do not even have a firing point.

My Lords, of course I would accept that the process would then come back. One would have the initial input of the country's forecast of what it was to do. This would go up to the central body who would consider it and produce a report. It is likely that the constituent member-States would then want to moderate and revise their own targets and intentions in the light of the advice indicated by the broader picture. I do not want for a moment to decry the need for co-ordination, harmonisation, whatever one calls it; far from it. Indeed, last week in this House several noble Lords from all sides of the House were calling attention to the enormous potential savings that we were foregoing in the sphere of defence by our total failure to achieve any reasonable degree of rationalisation and harmonisation in the equipment and research and development spheres. We should be thoroughly ashamed of it. To the extent that this Report represents an attempt to try to tackle that problem, then we really must welcome it.

My Lords, I think that this applies also in the case of nuclear energy, although I find that I am brought back to the occasion when we were talking about what the nuclear energy policy should be. We were told then that the experts disagree. Under these circumstances, one can imagine the difficulties that the Commission find themselves in. So, if this is the first attempt to draw up a coherent energy policy for Europe, we should welcome it. It does at least focus our minds on some of the problems, and, perhaps, it calls attention to some of the decisions that if we have not made already, it is high time we started thinking about making; such decisions as how we are to obtain informed information on which to base those decisions. I regret very much that we find ourselves having comments to make about this Report, claiming that it is largely in "Cloud Cuckoo-land". It lacks credibility and reality. This was a point taken up by many noble Lords.

My Lords, then we come to the thorny question of timing, procedure, Parliamentary control and sovereignty. If we are to have any kind of Parliamentary control at the initial stages of policy-making, Parliament would like to have a discussion to give some guidance to the EEC Commission on how our minds are moving. This would act as an input. Then one receives their detailed proposals, and one has the opportunity to discuss them. I am not absolutely certain what stage we have reached, because we are all agreed that we have been galloping to try to catch up.

We have had all these documents, and we have had the noble Earl, Lord Bess-borough, doing his best, if I may say so, to bring us up to date with documents that I think were published only this morning. Certainly I have never even heard of the Third Report which has curiously appeared after the Fifth Report; I think it appeared last week. Then we had the Minister in some doubt as to whether the latest directives did or did not modify the discussion Paper on which we started the debate. I do not want to labour the point, but it clearly is rather a ridiculous situation. One noble Lord used a better word; I think it was Lord Bessborough.

The Earl of BESSBOROUGH

Lord Balogh did not like it.

Lord STRATHCONA and MOUNT ROYAL

The whole of this discussion is being based on a document which was printed on 18th July and became available on 28th November. I think we have a procedural and management and information problem to which we must address ourselves.

Lord DAVIES of LEEK

My Lords, this is exactly what happened to the brontosaurus. It could not get the message from the centre to the other parts of the body; so it was finished.

Lord STRATHCONA and MOUNT ROYAL

My Lords, they in fact lasted for several thousands of years, of course. It depends on what stage in our evolution you see us as being at the moment. The other thing that shook me a little in reading this document was the, I suppose it is called, "Eurospeak" that we are going to have to get used to. The first thing we were introduced to were these gigawatts, which I think are 1,000 million watts. Then there was another very curious creature, perhaps some relation to the brontosaurus, which is called a "mill-toe", which is animadverted to at the bottom and it means million tons of oil equivalent. I notice that the tons in this case are spelled "tons" and not the other kind of Euro-tonnes we seem to be using a good deal lately, which is "tonnes".

Then there was a most strange statement that I could not make very much sense out of. On page 15, for example, we see at the top—I am looking at this lurid-coloured document— The cost of proposed policy must be compared with the costs that could be attributable to a less voluntaristic evolution of energy supply ". A little further down the same page it says: A problem arises for it does not suffice if investments are macro economically feasible ". I would not know, but this is not the normal language of the ordinary Parliamentarian, I would suggest, and I can imagine Lord Conesford and Sir Ernest Gowers revolving in their graves if they saw that kind of thing produced for us here.

However, that is really a carping criticism which perhaps I can get away with rather late in the evening at the risk of wasting your Lordships' time. There was another splendid one on page 19.

Lord LLOYD of KILGERRAN

My Lords, I am so sorry to interrupt the noble Lord, but I am trying to follow his very bitter attack, it seems to me, upon the administration of the EEC. I understood that when the matter was discussed in another place one of his honourable friends pointed out when he was chairman of the committee that what the Parliamentary institution concerned had to do was to consider the report that was before it and not to consider how these reports were produced. But now the noble Lord is referring to another report; I have not got the reference to it, and I am trying to follow him in his very serious criticism of the Commission's methods.

Lord STRATHCONA and MOUNT ROYAL

My Lords, I am sorry if I have led the noble Lord into some difficulty. There are quite a number of documents kicking around. I think this one is a kind of public version of a rather thicker mimeographed document. The other example of the strange comments that I wanted to call to your Lordships' attention occurs when they refer to the desire not to use natural gas to burn as a fuel in a power station. It says: This fuel should as a general rule be reserved for more economic uses than fuelling power stations. What on earth is that supposed to mean? I think it is possible that this was prepared in French and translated into English. I understand that in the Irish Parliament they make their speeches in English, they are recorded in Erse, and then translated back into English when they quote from them. So we can see the kind of difficulties we might get ourselves into. However, these are all rather laborious ways of saying that we have an administrative problem, which is a little more than just an administrative problem because it means that there is a danger of our losing our Parliamentary influence on important issues. This is a point that has been made time and time again in various speeches this evening.

Of course, we are delighted to hear M. Simonet accepting a statement that was made by my noble friend Lord Carrington right at the beginning when he said that the oil is ours. I think some of us were quite surprised by that, and I am very pleased that M. Simonet has once again confirmed that.

We had a long argument about the possible extent to which nuclear power could take over our power requirements in future years. I accepted the comments of the noble Lord, Lord Wynne-Jones, that these projections were unreal. Many other noble Lords thought the technical problems were being treated altogether too lightly and too cavalierly and that we were building castles in the air—reactors in the air, if you like. The danger of that, of course, is that it is an invitation to neglect some of the other sources of power. If we think we are going to be safe to rely upon nuclear power, I think the sense of this debate is that we have another think coming. There is an obvious gap opening up, and we do not believe that this document has recognised this possibility.

Clearly it raises the question as to whether our nuclear research and building programme is the right one. This is an old, old story. The British aircraft industry, for example, was always in the habit of having far too many aeroplanes under development. We have tended to want to hedge our bets rather than put all our eggs in one basket. I would suggest that on balance our development of our own nuclear reactor is probably about right. There is a temptation to say that the French are beating us to the export market. I should have thought that even if it proved that the PWR is the right route, it will not be too difficult for us to get back into that technology again if we should ever need to. There are all the difficulties of fuel supplies and control of pollution. We have talked about the fast breeder reactor, which the noble Earl, Lord Halsbury, once described to me as a controlled atom bomb. We are not near to having a safe fast breeder reactor yet, so far as I can make out, and the fusion reactor is still, I should have thought, well into the next century, so we cannot rely on this.

This leads us back, does it not, to the reliance that we are going to have to place on our own coal industry? I was delighted to hear that our technologists are as good as any in the world when it comes to modern utilisation of coal. I think it was said once that you have to invest something like 10 per cent. annually in the coal industry merely to stay in the same place, as your seams run out. The Selby field will do little more initially than keep us topped up where we are. We are going to have to run very hard to stay in the same place, and so far we have gone back a little. But do not let us again get seduced into the argument of saying we can neglect these industries because we have the North Sea oil. I am not going to go into an argument with the noble Lord as to whether or not the Government are in danger of frightening off the oil companies. I believe they are in danger of doing so, but I do not think they have yet done so. Let us leave it at that. We have a number of Bills in preparation in another place which will be coming up to us, and that will be the time to discuss them.

I have said one or two unkind things about the Commission and about the document that we have been arguing about. I did not want to damn the effort. My fear is that the manner of its presentation, and the manner in which the figures have been prepared, are in danger of doing real harm to the laudable aim of attaining a rational and co-ordinated energy policy.

6.51 p.m.

Lord BALOGH

My Lords, may I first of all congratulate the Lords' Members of the sub-committee on energy of the Select Commmittee of the House of Lords on what seems to me a most thorough and admirable piece of work on the proposals of the EEC Commission "towards a new energy policy strategy for the Community". May I also congratulate the noble Earl, Lord Lauderdale, in particular for his hat trick. He has become a chairman of the Committee, he has initiated the debate, and made a most excellent speech. We have crossed swords very much in the past, but for once in what follows I think that he will see that we are in close intellectual contact with one another.

Before I go into other details, may I make two remarks. The first remark concerns the noble Earl, Lord Bessborough. I do not believe that he is suddenly producing a Paper. I must confess that I only got it today, but that is a little local difficulty in my Department rather than anything else, which I shall try to clear up.

The Earl of BESSBOROUGH

My Lords, may I say one word to the noble Lord on this point. As he knows, in the European Parliament Committees, which are rather like Select Committtees, all parties are represented, and the Commissioner often gives us prior information. He consults us in advance—and sometimes when there is only a gleam in his eye—as to what is to be produced. In this case he was so good as to come to me and give me a partial summary of this document, which I understand is perfectly in order under the procedure of the European Parliament.

Lord BALOGH

My Lords, it must have been a very partial communication, because I agree with the noble Lord, Lord Strathcona and Mount Royal, when he says that this is not the way to run a railway, and far less a way to run Europe. However, I can assure the noble Lords that during the debate I have been looking into the question of whether this makes our debate ludicrous, as the noble Earl has recorded, or not. I can assure noble Lords that it does not. The maximum divergence from the original target is 3 percentage points. I would call it "minimal" rather than "ludicrous".

Obviously, the first question to answer is, how ought we to consider these documents. That is a very important question, because, as the noble Lord, Lord Strathcona, said (and perhaps I may omit the "Mount Royal", because I shall have to refer to the noble Lord again) it is most important that it should be done in an orderly manner. I can say that the usual channels will arrange to find time for debates on any European proposals for legislation which the Committee recommends merit debate. It has been the Government's repeated intention that debates should, whenever possible, take place before final decisions are made in the Council of Ministers. I hope that that satisfies the noble Earl.

The Commission's Papers are unquestionably potentially most important documents. I think that the noble Lord, Lord Strathcona, was confused, and I think that he confused me too. I had thought that I could give the answer, but I am not so sure now. There are two documents: one dated July is called Towards the New Energy Policy, and the other was not printed in July but was said to have been published in Brussels on 27th November. Both Papers are potentially the most important documents to have come out of Brussels since our accession to the Community. They are long and complex documents, and the subcommittee's task was arduous. I think I may say that they have acquitted themselves with distinction. I shall limit myself to the points made on these documents, although I see perfectly the points made by the noble Lord, Lord Orr-Ewing, which have been noted. I think that he will find that they will have largely been acted upon, and I am quite sure that there will be occasion to debate them as well as the question of the military uses of atomic energy. I hope that your Lordships will forgive me if I speak slightly longer than usual—perhaps not so long as last time—because the issue is very complex.

I think that the approach of the subcommittee to the document in question, which is an important document, and to the whole question of Community energy policy, can best be illustrated by the third paragraph from the bottom of page 4 of the Fifth Report. The noble Lord, Lord Davies of Leek, has already quoted it, and therefore I shall not read it again, but it refers to the main problem of sovereignty. I can accept this statement without any qualification whatsoever.

May I also remind the House of the robust Statement made last year in this House by the then Conservative Secretary of State for Energy, and which the noble Lord, Lord Strathcona, partly quoted. I have a longer quotation: North Sea oil belongs to us—and that is that. For once I could not agree more fully and wholeheartedly with the noble Lord, Lord Carrington. Indeed, we all agree on this, and we intend that the United Kingdom Government should continue to exercise full control over our North Sea resources

Within this framework, but only within this framework, we should like, at the Energy Council Meeting of Ministers on 17th December, to take as positive a line as possible in finding areas of agreement with our partners. But, as my right honourable friend the present Secretary of State for Energy said in another place last week: I am in full agreement with those who say that it is essential that the United Kingdom should continue to exercise full rights and control over these resources because when it comes to such vital matters as exploration, depletion, disposal and taxation policies it is right that we should decide these in this House. I accept that these matters must remain in the hands of the British Government."—[OFFICIAL REPORT, Commons, 3/12/74, col. 1513.] I do not think that you can ask for a most positive assurance. Fortunately, the basic principles of our right to the control of, and benefit from, our new resources are not disputed by the EEC Commission.

Noble Lords will have seen reports of a speech made by M. Simonet in Oxford, but he was also reported in Brussels to have said: Nous n'avons pas l'intention d'organiser une expedition pour vous priver ni des benefices economiques de ces decouvertes ni même du controle que vous exercez sur elles'. or in English: We do not intend to organise an expedition to deprive you either of the economic benefits of these discoveries or even of the control which you exercise over them. If, indeed, that is what M. Simonet said—and the noble Earl, Lord Bessborough confirms it—it accords with our own view. The answers by the Secretary of State for Energy in another place show how we intend to exercise that control.

The Select Committee also referred to the timetable for consideration of the Commission's proposals, particularly in relation to the acceptance of the proposed objectives in principle. Therefore, in our view—and I believe in the view of some other member States—the Commission's targets are over-optimistic. That is certainly true, as the noble Earl and my noble friend Lord Wynne-Jones said, of the proposed target for nuclear energy of 200 gigawatts installed capacity by 1985. We contend that this is unrealistic. It is also true that there was insufficient consultation between the Commission and the member States in preparing this document. However, a great deal of discussion has taken place since. In the course of this discussion, it has become apparent that the Commission has taken a far more optimistic view of the possibilities than have other member Governments in formulating their own proposals. I do not want to pursue this matter, because of the lateness of the hour. The United Kingdom does not object to the concept of Community targets, but insists that the Community should be realistic; that they should be—as the Resolution of the Council of 17th September recognised—regarded merely as guidance for formulation of national policies and no more.

It might be helpful at this stage to comment on the policy proposals which the Commission has made for each fuel. Apart from their exaggerated size, to which I have already referred, the Commissions' proposals for the electricity sector are generally sensible. We certainly accept that electricity has a major part to play in the development of our energy potential, and the draft directives attached to the Commission document are relevant to the electricity chapter of the Report. The draft directives take up the suggestion in the Report that the use of natural gas in power stations should be limited, and that the construction of new Oil-fired base-load plants should not be authorised except in special circumstances. Neither of the draft directives is acceptable to us in the form in which they are proposed by the Commission, but in discussions among national experts in Brussels some progress has been made in making the directives acceptable to us.

The Commission's proposals on coal do not pose any particular problems to us; in this perhaps we differ somewhat from some of my noble friends behind me. But I do not regard the directives as realistic, given the fact that the sinking of a new coal mine (especially of gigantic coal mines such as the Selby Field might be) takes time and the time factor in this case is such that we cannot rely on much more. Moreover, as the noble Lord, Lord Strathcona and Mount Royal, said, we have to run very fast in order to stay put. There are a number of coal mines which will become exhausted in the next few years. Therefore I do not think we can rely very much on what the Commission says regarding this area, but we shall do our best, both in manpower recruiting and otherwise, to achieve a realistic target.

The Commission's proposals on oil pose greater difficulties although our main criticism is their lack of relevance to the real problems of oil supply and prices which are confronting us as a potentially self-sufficient country. The first objective is a common approach to other oil consumers and to the producing countries. This is clearly desirable, but there are well-recognised limits to what the EEC can do by itself. Effective co-operative arrangements between consumer countries and a dialogue with the producing countries can only be conducted by a group which includes the main consumers outside the EEC—more especially the USA and Japan. I shall return to this point. Then there is support of development schemes for making energy more effective, and other research. The scheme—which is for only £10 million to support technical research and which is likely to come up at the forthcoming Council of Energy Ministers' meeting for approval—is limited, although obviously welcome.

However, I must strongly emphasise that it is most regrettable that a more active attitude to it has not been adopted by our own industry. Only one British project has been put forward, though five others are from a majority American/French company located in Britain. We are doing our best to encourage British industry to make the best use of any opportunity that offers itself, and we hope that they will now begin to realise the importance of not missing out on anything which could improve their relative position in all industries, but more especially in a growth industry such as this one.

The third objective of the Commission is for arrangements to deal with the supply difficulties. This is an important objective but it has now been met as well as it can be by arrangements made on a wider international basis. I refer, my Lords, to the international energy programme in which all EEC members, with the exception of France, are participating, together with eight other OECD countries, including the USA and Japan. The agreement provides for international cooperation across a whole range of energy problems; but the most immediate part is a scheme for sharing oil in an emergency. Under the scheme, participants agree to operate a sharing arrangement on a basis that takes account of all available oil, both domestic and imported, to use stocks accordingly and, in parallel, to take measures that achieve a corresponding degree of demand restraint.

It is the fact that the United States, by far the largest consumer of oil in the world, is willing to co-operate by reducing demand and sharing its available supplies in a crisis, which makes the scheme effective and worth while for us. Nothing which Europe could have done on its own would have been anything like as effective or as relevant to the real problems of oil supplies as this international energy programme. The United Kingdom considers this programme to be a major breakthrough in international co-operation in the energy field. We recognise, however, the need for the EEC to have proper information on oil movements within the Community and for some supervision of price movements in times of shortage. On these aspects, we are prepared to accept much of what the Commission says.

As my right honourable friend said in another place last Tuesday, 3rd December: The proposals … are concerned mainly with ensuring effective consultation between member States and the co-ordination of national energy policies. I, for my part, while respecting the provisions of the treaty, will continue to resist any proposals by the Commission that could interfere with our ability to carry through our Continental Shelf policies in accordance with the overall energy and fiscal objectives that have been laid down by the House."—[OFFICIAL REPORT, Commons, 3/12/74; col. 1513.] I hope that this statement will reassure noble Lords on both sides of the House.

The regulation at Annex III to the document—dealing with common rules for import and export of oil and gas to and from third countries—proposes the extension of certain existing regulations providing for surveillance, through a system of licences, and subsequently for protective measures under which the Commission could impose controls and on which the Council would decide by a qualified majority. This is unacceptable and we have said so. In this view the United Kingdom has not been alone. Other member countries share this view. The use of these regulations, which were framed for other purposes—in particular, dumping—is artificial. In times of shortage the international energy programme arrangements, to which I have already referred, would provide the main safeguard for Community members without, incidentally, infringing any Commmunity rules.

Finally, there is the objective of a proper organisation of the oil market. This is a complex area of policy, involving the multi-national companies, which needs a good deal of further study and discussion, and at this moment I should not like to comment on it. The Commission's proposals for gas are aimed at doubling the share of this fuel in total energy consumption. This would be done by expanding imports from third countries, but also by encouraging prospecting within the Community. So far as we are concerned, we shall use all the gas likely to become available from our sector of the North Sea, and we have to include some from the Norwegian sector. We are not convinced by the projections of the Commission.

I should like to refer to the Commission's tentative proposals, to which the noble Lord, Lord Strathcona, has already alluded, to set up a Community agency having legal personality and financial autonomy. The Select Committee rightly draws attention to the implications of this proposal on sovereignty, as also did the noble Lord, Lord MacLeod of Fuinary. We do not at the moment see the relevance of this proposal. The EEC energy policy should, in our view, involve a common effort to achieve agreed objectives. Achieving these objectives is largely a matter of harmonising the policies of member Governments. In these circumstances, we do not see any need at present for an agency along the lines suggested by the Commission. The sub-committee noted that this statement leaves unclear the form proposed for such a body, whether it is to be on the lines of the European Coal and Steel Community or of some advisory body. This will have to be fully explored by the United Kingdom Minister, for it may involve sovereignty. As my right honourable friend said: There has been comment on the suggestion in [the document] that the objectives proposed could be assigned to the Commission's energy agency and that it could take legal and binding decisions and have financial autonomy over the United Kingdom Government. The Government see no need for such an agency and we shall say so quite frankly. We see the EEC energy policy at most as the harmonisation of national policies with control exercised by national Governments ". What we need at this stage is a coordination of objectives, an exchange of information and full co-operation, both within the Community and on the wider international scene.

The Select Committee also raises the question of energy conservation. I would refer noble Lords to my right honourable friend's Statement, which I repeated to this House today. So far as Europe is concerned, I would accept that there is considerable scope for co-operation. In fact, this is a matter which we have been discussing with the Commission and with our partners. On the 17th December, or at an earlier or later date, the Council of Ministers will probably be asked to give further impetus to discussions between national experts, which we hope will result in an increased measure of co-operation and co-ordination.

I should like to say a word about the meeting of the Council of Energy Ministers which will take place in Brussels on the 17th December. We do not yet have the final agenda, but certainly there will be a discussion on a resolution based on the conclusions of the document referred to in the Select Committee Report, possibly modified (but not very much modified) by the new document. There may possibly be a separate resolution on coal policy, on oil and gas policy and—although, on the whole, this seems more likely to be deferred until later—on nuclear matters. Another document on which discussion seems probable is a Paper entitled Energy for Europe, which sets out the Commission's ideas on the future pattern of energy research and development in the Community.

In closing—and I have once more tried your Lordships' patience very much—I should like again to congratulate the noble Lords on the sub-committee, who accomplished a daunting task. I think we agree on all sides on the importance for the future of our children, and of our children's children, of the issues involved. We must be careful. I have already pointed out that the Commission have not disputed that the ultimate sovereignty over our oil is ours, and that we cannot be deprived of the advantages which flow from the discovery of that oil—and I want to stress the point that it has been accepted. We shall preserve these rights and benefits, and we shall look very carefully at all resolutions and proposals for specific measures by the Community from that point of view. The advantages that accrue to the United Kingdom contribute significantly to the Commission's objective, which we endorse, of reducing dependence on external and uncertain supplies of oil.

The United Kingdom's contribution to this objective is indeed considerable. Our oil and gas, our investment in coal pro duction and nuclear power, and the energy——conservation——programme announced by my right honourable friend, will play a major part in reducing overall European dependence on imported oil, and thus in dealing with the threat to the world economy posed by the sudden and brutal increases in the price of oil. The sub-committee calls attention to the necessity for careful scrutiny of proposals which, each taken separately, cannot be said to constitute a questioning of our sovereignty but which, taken together, could be so. As the quotations from my right honourable friend's speech show, the Government are alert to their responsibilities. We must beware—and this is how I shall finish—lest, as in an old Central European story, the delightful situation in which we have the oil and they have the policy should be transformed into a different situation in which we have their policy but they have our oil.

7.17 p.m.

The Earl of LAUDERDALE

My Lords, may I first thank all noble Lords who have been good enough to take part in this debate and to bring to bear on the subject a range of scholarship and experience which has given it particular value. It would be churlish not once again to refer to the noble Lord, Lord Champion, who was the editor and the mastermind of the Report which we have been discussing this afternoon. I should like particularly to thank the noble Lord, Lord Balogh, for his kind words to myself and, if I may put it correctly, a most helpful approach to the subject which is exercising all our minds. We are grateful in particular for his assurance that it is the Government's intention that, so far as possible, debates recommended by Select Committees shall be held before decisions at Council level are taken. I think it is only fair to warn the noble Lord (and, through him, the Government) that we may want to press that a little further on another occasion and to get the further assurance that there will be no decision until a debate has taken place—and the noble Lord, Lord Balogh, as a logician, will quickly appreciate the distinction in formal logic between those two propositions.

In thanking all noble Lords who have taken part, I must particularly thank my noble friend Lord Bessborough for this exercise of his burdensome dual mandate. Noble Lords sometimes take for granted the effort of those of our company who also attend the Parliament in Strasbourg. The effort to attend there and attend here, and to be in both places on the most useful occasions, is something which requires great assiduity and toughness of fibre. We are very grateful to the noble Earl, Lord Bessborough, for his participation today. He told us of document after document that has yet to reach our desks, and the noble Lord, Lord Strathcona, likewise breathed a prayer which we have all breathed at times, that it would be nice to discuss some of these matters early on.

My Lords, there are times when members of the Select Committee, bewildered by the swift-changing forecasts of the forthcoming Council agenda, feel a little like Mr. Harold Macmillan when he was debating economic matters some years ago in another place, on which occasion he said: I sometimes feel like a man looking up trains in last year's Bradshaw. Between the demands of the Parliamentary programme here and the changing pattern of the Council of Ministers' agenda, some of us feel sometimes that it is somewhat like riding two parallel escalators at different speeds.

My Lords, we have been greatly interested in all that has been said. I think that, with a varying degree of emphasis and a variety of angles of specialist knowledge and approach, a broad majority consensus has emerged that the policy that the Committee believe the House should consider has at least been sired in ambiguity and born in paradox. But must we whistle in the dark to keep up our courage? Are we forever to live bold with the valour of ignorance? May we not hear a little more from the Government, perhaps not now but on another occasion, on one aspect of the speech of the noble Lord, Lord Balogh? He stressed the British position on sovereignty and we were all much comforted by that. He went on to say that the Government proposed to take a positive line in seeking agreement with our partners. That too we applaud. But may we hear at some time what really is in the wind about Community investment in British offshore oil exploration and in the nuclear development programme? That is something, however beautiful it may sound to a believer's ear, which carries certain overtones which are less attractive to (shall I say?) the agnostic or the sceptic.

At any rate, the issue in general is not a mean one. A decade of urgency is at hand. The question might well have been whether policy should have been debased without being debated. The noble Lord's assurances have carried us 90 per cent. if not 99 per cent. of the way that we hoped to be carried. He has therefore by implication assured us that "taking note" is no mere formality and that the energy policy will not be allowed to disperse in a cloud of unknowing or to evaporate in a chaotic whirligig of pragmatic illusions.

On Question, Motion agreed to.