§ 3.4 p.m.
§ Lord WYNNE-JONES rose to call attention to the First Report of the European Communities Committee (H.L. (1978–79) 9) on the position of the Community's coal industry (R/3128/76), and to its implications for the future of the coal industry; and to move for Papers. The noble Lord said: My Lords, in presenting to your Lordships the report of the Select Committee on the European Communities, and in particular the report of the Sub-Committee, I should like to say a few words in preface. First, I wish to pay a tribute to the person who was largely responsible for initiating this inquiry: I refer to the late Lady Tweeds-muir of Belhelvie. She specially encouraged the introduction of an inquiry into the matter of the coal policy of the Community. She pointed out that, strangely enough, Parliament had never carried out any investigation into the European Coal and Steel Community, although the European Coal and Steel Community is older than the European Economic Community. No inquiry, apparently, had been carried out, and she therefore suggested that it would be very desirable that Sub-Committee F—the Sub-Committee that deals with energy, transport, and such matters—might look into this question. I was specifically asked to act as convener of the Committee for this purpose.
§ In carrying out the inquiry we were immensely helped, first, by the assiduity and the keenness of the members of the Committee. I do not propose to name them—it would be invidious to do so— but I must say that the Committee as a whole took an immense amount of trouble. It might have amused your Lordships to witness one occasion when a group from the Committee—none of whom was, I think, aged much under 70—went down a coal mine and went to the coal-face in order to investigate the way in which coal is cut and brought up. One member 1332 of our Committee took enormous trouble to go even beyond that. He assured me that he went to one mine where the incline was 30 degrees, which is almost the angle of glide; that must have been quite an experience. Thus, I can assure your Lordships that the Committee took much trouble, but leaving aside that fact, we were extraordinarily well served both by the Clerk to the Committee and by Mr. Thorley, our adviser, who was largely responsible for putting the report finally into a form which I hope satisfies your Lordships' feeling regarding correctness of language and approach to a subject.
§ I should like to make one other point at this stage. I did not realise that today, when we were to debate this matter, would be the very day on which one of the most distinguished lawyers of the country, the noble and learned Lord, Lord Denning, was having a birthday; and I should like to say that I personally wish him many happy returns of the day.
§ To turn to the subject of the debate, I should say that we in the Committee were concerned with the whole problem of coal: the mining of coal, the distribution of coal, the burning of coal, and the processing of coal both in this country and in the Community. We should not have been justified in restricting our attention merely to this country because we were a Sub-Committee of the European Economic Communities Committee, and so we were bound to consider the matter in European terms. We started with the statement that was made in the European Commission's own proposals put forward in 1974, in which they said that the future on the energy side was likely to be distinctly troublesome. Remember that this was immediately after there had been the first Arab intervention in the price of oil, in which they decided that the price was going to rise sensationally and in which it became clear that the era of cheap oil had gone. The European Commission recommended at the time that the dependence of Europe upon oil should be drastically cut, and that coal and nuclear energy should be the two main props of an energy policy during the remainder of this century.
§ Now what has happened? At the time when they put this forward the European Community as a whole—that is, including this country, Germany, France, Belgium, 1333 the Netherlands, and so on—were producing approximately 250 million tons of coal a year. It was the opinion of the Commission that this ought to be considerably increased. It has decreased, and over the last three years it has been more like 230 million tons instead of the 250 million tons that were being produced at that time.
§ Furthermore, whereas there used to be a prosperous Dutch coal industry, there is now no Dutch coal industry. There used to be quite a substantial Belgian coal industry; I think they now produce about 2 million tons of coal a year. There used to be quite a substantial French coal industry; they are down to something between 5 million tons and 10 million tons of coal a year. The German industry used to produce as much coal as we did; they are now down to 90 million tons a year compared with the peak production that we had of 250 million tons. We, ourselves, had been dropping drastically, and we are down to something like 130 million tons of coal a year.
§ So instead of coal being something that was going to be a main prop for our energy supplies during this century coal has been steadily, dramatically, in fact, relapsing and we have been getting less coal instead of more. It is true that in this country there has been a reversal, and it is true that the tripartite agreement to which the noble Earl, Lord Lauderdale, referred in his Question, has played an important part in reversing this tendency, but we are still faced with the fact that coal is no longer throughout Europe the major prop of our energy requirements.
§ This is a very serious and important thing because it means either that we are dependent upon oil which has to be imported—except for the oil that we in this country are fortunate enough to get from the North Sea—or we have to build nuclear energy stations on an enormous scale. Back in 1974, the requirement put forward by the European Commission was the building of something like 200 gigawatt equivalence of nuclear power. The gigawatt is equivalent—it is only a unit—to one of the largest stations, and so 200 of these were to be planned.
§ Your Sub-Committee presented a report to this House about three years ago in which it was pointed out—largely, if I 1334 may say so, on the experience of a very valuable Member of the Committee, Lord Hinton of Bankside, who built the first nuclear stations—that it was physically impossible to do this. At first, the Commission were rather shattered by our reply. In fact, they first refused to talk to us about it, but later they did talk to us and they accepted the point of view. I may say that ever since then we have had the friendliest relations with the Energy Directorate of the Commission. But it is important to realise that the premises on which that policy was put forward were utterly wrong, and that now I think the aim in Europe, if they are lucky, is to get something like 45 instead of the 200, and it is doubtful if they will get that.
§ So we are faced with the problem— and it is important to realise this—that when people talk about there being an energy gap in the year 2000 they really mean an energy chasm. It is not a minor gap, it is an appalling chasm between requirement and supply as being planned. There is only one way in which one really meets such a situation, assuming that one does not have a vast resource of money to buy up all the oil of the world and let the Americans go hang. Assuming we cannot do that, the only other way is to do without energy, and this is the inevitable result of going ahead without being certain as to whether we are planning adequately for the future.
§ What your Committee suggests—and we are not going over the whole energy field; I am not using this debate in order to discuss every facet of the energy supply —is that one of the major props of the whole of our energy policy, the one that was regarded as such by the Commission, is coal. Are we, therefore, within the Community, doing enough in the way of meeting the inevitable demand for coal? We were delighted to find that the Government, the National Coal Board, the National Union of Mineworkers, had all agreed that there should be a target for the end of the century. One has to be careful about the use of words like "target" because when one looked at the figures one found that the lowest estimate put forward was 135 million tons of coal a year and the highest was 200 million tons of coal a year and, strangely enough, the figure decided 'on was 170 million tons, which your Lordships will 1335 realise is almost exactly half-way between the lower estimate and the higher estimate.
§ It so often happens that when people are faced with a situation like this they say, "All right, let us take the mean". In my experience, the mean is always wrong—except fortuitously now and again it happens to be right. So we felt strongly—and I am not speaking for myself at all; I am speaking for the Committee—that we ought to put our target as high as possible. We are not technical experts; we cannot tell the Government, the Coal Board or anybody else exactly what figure they must use. We simply said, "Aim at the upper end. Try for as much as you can get".
§ Noble Lords may say this is a trivial matter, but it is not, because even the target of 170 million tons a year means opening up approximately 4 million tons of fresh capacity every year from now until the end of the century, and that is a major operation. If, therefore, we say, "Go beyond that; go as high as you can", we are asking that there should be a determined effort to set our sights as high as possible. Unless our sights are set high, it is doubtful whether we shall reach even the low objective we have. Set them high enough and then we can, if we put the effort into it, have some hope of getting, if not there, then at least as high as turns out to be practicable. We therefore ask that this be treated as, as it were, a political issue, an issue highly appropriate to this House and to Parliament. It is an issue in which we are trying to get the maximum possible achievement by the end of the century, and unless we do that we shall certainly be short.
§ I do not intend to detain the House by going at length into the problems or the technicalities that arise, but a few points must be mentioned, one being that in the 1980s it is fairly certain there will be almost a glut of oil and gas available. Because of that, there is a temptation for a body like the Central Electricity Generating Board to use oil rather than coal for generating power. We looked into this matter carefully and I was surprised—I think other members of the Committee were surprised too—to learn that the amount of oil or coal burned by the CEGB did not really depend primarily 1336 on how many coal burning and oil burning stations they had, and for a very interesting reason. That reason is that they are looking to the time when their base load is carried by nuclear power. It is the peak load which is taken by oil or coal, and therefore they can switch from one to the other, even if we do not have dual firing, and they do not like dual firing because, they say, it is uneconomical.
§ Thus, building dual fired stations is not the answer. The answer is a definite policy to burn coal, if that is what we intend doing. Unless we decide on that, we shall be in real difficulty, because it could easily happen that in the 1980s the higher peak load will be taken over by oil rather than coal and the consumption of coal could drop drastically, so drastically that it could affect the whole financing of the coal industry.
§ That is why Mr. Brunner, the Commissioner in Brussels, has proposed that there should be a subsidy paid for the burning of coal in fire stations and that that subsidy should be equal to the difference between the domestic price of coal and the price of imported coal, because one can buy coal cheaply from Australia and America. He therefore makes this proposal, which would go a long way to meeting the situation, and unless something like that is done we may find ourselves in a difficult position.
§ That is in the 1980s. Later on, there will not be an excess supply of oil; we shall begin to be short of oil and we shall then be in the position of wanting coal at the very time when the coal industry is run down. That is why your Committee believes it to be absolutely vital to maintain the coal industry at the highest possible level and to go on increasing it steadily. Obviously, if by the end of the century we did not want the coal, then all we are proposing would be nonsense; but we believe there is every reason to suppose we shall need it and that we shall need it for energy production, because it is doubtful whether we can build the nuclear stations in time to meet the requirement by the end of the century, and therefore the coal will be required.
§ But there is another point, namely, that even when coal is no longer required as a source of energy in the sense of electrical 1337 energy or anything of that nature, we shall need coal as a petro-chemical source because, when oil fails us, our chemical industry, which at the moment is largely dependent on oil, will not have the resources. Coal is the one hydrocarbon source that we know with absolute certainty we can rely on in this country for at least 300 years and in America for probably 600 years. We must therefore realise that there is a vital necessity to preserve the coal industry now for energy reasons and to have it in good working shape at the turn of the century to be a petro-chemical source.
§ Those are the main points I wish to make. There is much more I hope other speakers will say. I can only hope that perhaps when I look down and see your Lordships deliberating in the year 2000 there will be a Secretary of State for Energy who will be saying that this country was able to save itself by its own efforts and to save Europe by its example.
§ 3.28 p.m.
§ Lord STRATHCONA and MOUNT ROYAL
My Lords, I wish I could emulate the Committee and the noble Lord who chaired most of its meetings—and who generously gave so much of the credit to the Clerk and his adviser—in the clarity and brevity with which they have woven their way through an extraordinarily complex and indeed rather emotive series of issues which affect the industry on which the prosperity of this country was founded some 200 years ago. I must also congratulate the noble Lord on having achieved the rather unique distinction of managing to have three coal debates in one day and still, during that time, managing to show how deeply he understands all the issues by a simplicity and clarity which could be based only on a real understanding of the subject.
The first point to emerge, one which always seems to emerge with energy problems, is that the lead time for developments and results of those developments in almost all energy production is of the order of seven to 10 years, and sometimes 15, whereas we are fortunate if the politician lifts his eyes even so far ahead as five years; usually, I regret to say, it is a great deal less. Here, the report suggests—although it does not do it in these terms—that maybe the Commission 1338 has a real contribution to make since it is, I hope, not quite so mesmerised by short-term political considerations as most Ministers have to be.
The overall energy situation is strikingly stated in the report on page xii, where it says quite bluntly:But our problem in 2010 may not be to cover our total energy needs at the lowest cost, but to cover them at all";and this was a point to which the noble Lord referred. But then again, on page vii the report also says, bringing it back to the specific issue of coal:On any credible hypothesis, a much greater quantity of coal and nuclear power will be needed as the end of the century approaches".I think I should say two things about that. That comparatively simple statement postulates that we can overcome the environmental problems both of getting the coal and of converting it into useful energy. Perhaps I may say in passing that I think these problems are a good deal easier for the nuclear industry than they are for the coal industry, which is more dangerous and more polluting than is the nuclear industry.
That statement also postulates at least a partial acceptance of the prospect of continuously rising energy consumption, and this, of course, is passionately disputed by some writers. Lovins' Soft Energy Paths, for one; and the one which was referred to earlier this afternoon, Gerald Leach's recent book, A Low Energy Strategy for the United Kingdom. They believe that the exponential increase in energy is unnecessary, expensive and potentially disastrous. Even if one does not go all the way with them, I think we should pay attention to their arguments; and I would still believe that there is a great deal to be said for spending money on not using energy. That may sound rather Irish, but in point of fact it is a great deal cheaper to save energy than it is to spend money producing energy sources, I would believe.
However, there is another factor which is pulling the same way—at least at the Community level, as the noble Lord has also said—and that is referred to several times in this report. The Community has a declared policy of striving to reduce what it calls "import dependence". That is a political decision to attempt to emancipate themselves from the outside 1339 pressures associated with the dependence, from outside sources, upon so vital a resource as energy supply. But I have never seen anywhere any attempt to quantify the price that the Community are willing to pay for what one might call this political luxury. I think it is important to realise, however, here, that the United Kingdom situation is radically different from that in the rest of the Community; indeed, in all of Western Europe except Norway.
We are fortunate enough to be able confidently to forecast energy independence within a couple of years now: 1980 is the date usually used. This is not only because we have these large coal resources —and I think we are still discovering more resources as the days go by, with the massive exploration programme which there has been. Combined with that we have the oil and natural gas discoveries of the last 10 or 15 years; and, in what I might call the medium-term, we in this country now have a very large reserve of spent fuel from the thermal nuclear stations, which potentially is usable as a massive energy source once the breeder reactor becomes a reality—and there is no doubt in my mind that it will, although there is some question as to the economics with regard to developing it and who is going to do it. But I think we must face the fact that our situation is different from that of the rest of the Community. We do not have the same imperative need to invest in energy independence as they have. Incidentally, it is ironical that this is at least partly due to the fact that the price rise as a result of the OPEC cartel in 1973 was the thing which in fact made it economic for us to open up the North Sea oil, which might not otherwise have been the case.
It seems to me, therefore, that in view of the fact that we are engaged in an international struggle for our industrial and economic survival, we have to be very careful that we do not hamstring our industry by imposing upon ourselves an environment of relatively high energy costs in relation to our competitors. This is the dilemma about our coal industry. It is very tempting to say, "Let market forces prevail"—and, indeed, the more complicated the situation becomes the more I find myself tempted to take refuge in a simple statement of 1340 that kind—and I have no doubt that a contribution could be made towards reducing the overall cost of coal if we were prepared to close down the uneconomic capacity and concentrate on the viable coalfields, particularly those in the Midlands, and on opening up the new and potentially profitable coalfields which have been discovered. I do not for a moment underrate the social difficulty of doing something like that, but I would suggest that that aspect would be something which is quite separate from the problem of the coal industry as such.
The more serious point, I think, is the one to which the noble Lord referred, which is that if we allow the industry to decline we are then putting ourselves in the situation where we would have less capacity and have lost the trained workforce, and, indeed, where we would have lost the whole social organisation which we may be requiring again in a matter of 30 years. I think this time-scale is important, because I find myself tending towards a feeling that our proper policy would be to postulate a certain contraction in the industry for a time in the interest of reducing costs and improving efficiency—reculer pour mieux sauter, I suppose it might be said. It is also true to say that if we could reduce the cost of coal then, in fact, we would tend to stimulate the demand for it and might find that the balance would strike at a higher level than would otherwise be expected. There is no doubt that the demand for coal is extremely price-sensitive and the Coal Board recently produced some figures which are slightly disturbing in this respect. We have to remember that coal is rather less convenient to transport than is oil, is rather more difficult to use and has rather more environmental problems, other things being equal.
They pointed out that the price advantage that coal enjoys was 36 per cent. in January 1975, 26 per cent. in January 1977 and has come down to 14 per cent. in January 1978; although I hope to refer later to the question of the relevance of efficiency conversion of coal which is improving. But if it is true that developments take seven to 10 years and if it is true that we in this country will not run into an energy gap for 30 to 40 years, it suggests that there might be a case not for a steady increase of 4 million tons 1341 new capacity a year but a halt in creating the new capacity, to bring it in at twice the rate at a later date.
This may be said to be impractical; it may be that you want to build up the industry on a more steady basis. But it is quite clear that the price has to be controlled and, if possible, brought down by investment in new plant, by productivity schemes—which I understand are now beginning to work satisfactorily— and by bringing in new faces. Obviously, this is much more difficult to do against a pattern of falling demand but we have to face the fact that the cost talked about in A Plan for Coal in 1974 was £1,400 million—and the same figure was said to be over £3,000 million in 1977 and is now over £4,000 million. If we are going to spend that kind of money, then it must be justified so that I think the question of demand is crucial.
Here I refer to a rather strange expression. The noble Lord, Lord Wynne-Jones, said the word "target" is a curious word; but at the beginning of this report they refer to the "target for Community demand." I suppose that when you talk about a target for demand you mean that demand will have to be artificially stimulated. I believe that this is possibly the right thing to do and I am sure that the noble Lord was right when he talked about Commissioner Brunner's proposal to subsidise power station uses. It is worth remembering here that 60 per cent., I think, of the coal industry's output is currently used by the Central Electricity Generating Board where the demand is already slack and is likely to continue to be slack as the advanced gas-cooled reactors come on stream—is it four years late? or however many years late; but they are beginning to do their stuff.
Simultaneously we are faced at the present time with problems in the steel industry. The consumption by the steel industry in this country has dropped from 20 million tons in 1974 to 13 million tons last year, which is a drop of some 40 per cent. Yet, as the report points out, the Community is currently importing coking coal from outside. On page 7 they make a very fair point when they say:.… for the Community to be importing substantial quantities of coking coal at a time when there is a slump in that industry suggests that imports are not the marginal supply but are likely to persist when steel production improves".1342 This suggests that there is a potential market for the coking coal that we could produce in this country among our EEC brothers. I also understand in a number of countries—Denmark, France, Germany, Sweden and Holland—they are busy converting their power stations from coal to oil.
Unfortunately, much of the extra consumption is to be met by imports from outside, from Australia and the USA and rather less from Poland where, I gather, there is an increased demand and a problem of transport. It is worth making the point that the price advantage of Australian coal could be very rapidly eroded if world trade recovered and if the price of freight increased; because 50 per cent. of the cost of Australian coal delivered to this country is in freight and if the freight market recovered then the chances are that the price advantage of Australian coal would largely disappear. The other curious point that was not mentioned by the noble Lord is that I am given to understand that the large subsidies that the West Germans give to their coal industry are very largely concentrated on cushioning the effects of closing down capacity rather than being used to stimulate production. That hardly seems consistent with the declared objectives of the EEC, to which the noble Lord referred.
One of the brightest spots of our National Coal Board is their technical excellence. Particularly are they ahead in techniques of gasification, liquefaction and fluidised bed combustion. My understanding is that gasification and liquefaction are not likely to prove very economically attractive for quite some years to come; although I do not disagree with the noble Lord when he said that ultimately coal is going to be perhaps of more use as chemical feedstock than as a primary energy source. But fluidised bed combustion is important. It is important particularly because I understand it can be used in relatively smaller units and tends to produce less pollution. This offers a very attractive prospect in that sooner or later we have to come to combined heat and power production, that is to say that power stations not only produce electricity but use the 70 per cent. of the heat which may otherwise go up the chimney. You cannot do this if the power station is 20 or 30 miles out because it is such an unpleasant neighbour. If there are 1343 smaller units, they can be closer in and you have a chance to use the heat.
There is a particularly attractive prospect here in that the CEGB is now engaged on the prospect of phasing out some of its older, smaller and closer stations. Perhaps it would be sensible not to phase them out but to re-equip them with fluidised bed combustion systems and with combined heat and power, and then they do not have to become involved in all the planning and environment hassles because they are merely re-using an existing station that they already have. I hope that is not pipe-dreaming. It is certainly what I believe they hope. We are entitled to say to our European neighbours: You should be supporting more of our research effort. I believe this is one of the points that was being investigated during the Question period earlier today.
If I have not made the House as confused as I am myself about the different pressures, I must try and bring this matter together. I believe that the longer-term future of our coal industry is a bright one. It seems to me that the technical work now being done should bear fruit if the effort is kept up at just about the time when the demand will be rising again. However, it would be dangerous if we allowed this cheering prospect to blind us to the demand problems which we have in the nearer term, where low cost imports are available in a time of weak demand. It seems to me that we should try and turn this to our advantage by tackling our cost problems at source; but I think that we are entitled to remind our EEC colleagues of their energy independence policy and therefore their vested interest in assisting us to find markets, if only we can play our part in keeping down our costs.
§ 3.52 p.m.
§ Lord TANLAW
My Lords, we from these Benches would like to thank the noble Lord, Lord Wynne-Jones, for bringing about this debate on what is a very important report. Technical reports have a habit of being incredibly boring for non-technical people to read. They are also inclined on occasions to consist of long tracts of departmental prose which often appears to the readers to be highly uninformative. This report is 1344 neither of those things. It is interesting, and the method of questioning used by the Members of the Select Committee seems to extract from the very professional bodies and individuals that gave evidence the kind of replies which were comprehensible and extremely helpful to those of us who are not technical but are concerned with the creation of an energy policy in this country. One of the better comments—I cannot remember on which page this appears—was that the term "power generation" was reduced to "boiling water". That is really all that means, and we often forget that. Comments of this kind are helpful and are dotted throughout the pages of the report.
The main point that we can gather from what was being said is that the greatest concern of the Committee was how the British coal industry will survive the next 10 lean years in order to benefit from the high price and high hopes of demand that are anticipated for the early 1990s. This is based on the assumption, as has been said by the noble Lord, Lord Wynne-Jones, that the other fuel sources of oil and gas will be in short supply throughout Europe by this time, leaving coal and nuclear fuel as the only main alternatives in the field. I intend to expand on this briefly, but before doing so I should like to take up a point covered by the noble Lord, Lord Strathcona and Mount Royal, that there is a distinction, which I am not entirely sure was made clear the in report, between the European problem of coal and their energy problems and the United Kingdom problem of coal and its energy problem.
There is a very clear distinction which I shall come on to because the energy crisis in Europe is likely to occur—in my crude estimation anyway—at least 10 years earlier than it will be felt in the United Kingdom. This is due to Europe's large dependence on imported fuels for the bulk of their energy supplies. The point is that the demand for coal and therefore a market for it at the right price will occur in Europe long before it opens up again in the United Kingdom. During the 1980s there will be surplusses creating possibly a price war in which coal is bound to be the loser.
Let us not forget that the United Kingdom citizens are living in what is virtually an off-shore power station with almost 1345 unlimited indigenous energy supplies in the form of coal, and the question is how to make best use of this asset when the time comes. The Committee spent a considerable part of its time in investigations in attempting to find answers to this question. There is a scenario in Appendix II of the report, which can be considered either realistic or highly pessimistic, on the position in which the coal industry will find itself by the 1990s. This is entirely due to the record of the production to date and has been extrapolated forward. Emphasis was laid on the failure to meet current production targets, combined with the high prices to the consumer that exist today. Mr Gerald Manners the author of this paper, indicates that on past performance, and faced with a surplus of fuels at highly competitive prices during the 1980s, coal may be unable to compete without assistance of the kind suggested by the noble Lord, Lord Wynne-Jones.
This brings me on to the marketing of non-coking coal which seems from this report to be tied almost entirely to one customer, the Central Electricity Generating Board. The evidence given by the Board made it quite clear that it was not its function or duty to maintain a flourishing coal industry, but to provide electricity to the general public at an economic price. This philosophy seemed to justify the purchase of coal from outside the Community, as has been mentioned, from Poland, Australia or the United States, in order to fill the power stations at an economic cost. This conflict of interests is bound to continue during the critical period under discussion—that is, the 1980s—which the coal industry has to survive somehow in order to reap the rewards it hopes to do in the 1990s.
The coal industry can only do this, according to the report, either by a subsidy from Government, as has been suggested, in order that its production will continue to be taken up by the CEGB, or by savage economic measures involving pit closures, unemployment, rigid control of miners' wages, and so on. I do not accept that this needs to be the situation. I doubt if it would be tenable or practicable for either of these great monopolies to pursue this policy. I do not believe that the Government should treat the British coal industry like a pet dinosaur, just to delay its extinction. There must be a more 1346 positive approach than this which must lie in the right areas of research and development to make the industry more competitive for the time when it will be needed.
Before suggesting these areas for research and development and trying to establish which might be the most productive, I wish to raise the question of efficient energy conversion which is the basis of Liberal Party policy and which noble Lords are well aware has been the basis of almost every intervention I have made on this subject in this House. If I dare make a criticism of the report, it is that it has not made clear the distinction between using coal or energy to create heat and that which is to create power. The question in the 1990s, as I see it, will be how to manage the end use demand for heat other than via electricity, which even at its best has a conversion factor of only 30 per cent. The domestic consumer today relies on gas to provide this heat which is both cheap and efficient.
We are told that by the year 2000 this source of national gas will be unavailable, or at least Intermittent, and the same will also apply to oil. Therefore, is this demand to be satisfied only by electricity, or is there a way in which coal can fill this gap? I believe it can, provided that adequately funded research and development takes place over the next decade. These views were confirmed in the evidence given by Mr. Joe Gormley on pages 121–133 of the report. His conclusions come very close to the Liberal Party's policy and to their view of the greater use of district heating through combined heat and power systems based on the small, and now defunct, urban generating stations of the kind mentioned by the noble Lord, Lord Strathcona.
Mr. Gormley, I think, is a quite exceptional union leader in these days when they are often under some criticism. Not only does he know his subject but from the evidence he gave to this Committee he was able to show me, at least, that he was a man of great vision and was not entirely biased about his own industry or his own job. His conclusions on the areas of research and development, which are the areas I am discussing, were that there were two areas which needed development: gasification and the fluidised bed system. I happen entirely to 1347 agree with him. Nevertheless, I am both pleased and relieved to hear that a man of his experience has come to these conclusions. Not only do I not want to go into the technicalities of either system but I cannot, because I am not a technician. However, I should like to suggest to the noble Lord the Minister who is to reply to the debate that he might give us some hope that these are lines which will be more aggressively pursued than has been the case so far.
Very simply, it is quite clear that by the end of the century the natural gas lines will be lying empty and the domestic consumer will have to look for another source of heat for cooking and hot water. By that time, there will be abundant electricity—some people say there will be a surplus—to satisfy this gap. But in terms of energy conversion, I believe it should be used only as a last resort: that is, if the coal industry is unable to provide a domestic gas service to replace the natural North Sea gas which is being used at the moment. If that is made a prime objective for the coal industry, I believe it will rejuvenate the entire industry and also provide a future source of employment for many years to come.
Mr. Gormley went on to mention the fluidised bed system, the main development of which is, I understand, in the hands of the private sector rather than of the Coal Board. If Britain can continue to maintain its lead in this field—I think it has slipped, but hopefully it can perhaps be recovered through more funds and more enthusiasm being put into it by the Government—and can produce an economical system which is suitable for use by the small urban generating sets, then we shall have the exciting possibility of being able to provide combined heat and power systems for the city-dweller. I believe that these systems will be justified both in terms of energy conversion and in the provision to domestic consumers of a cheap and satisfactory service. This is something we in the Liberal Party have been pressing for many years, and I recommend to the noble Lord, Lord Strathcona, this excellent pamphlet by Mr. Graham Searle, who has covered this aspect very clearly. Indeed, the noble Lord may perhaps have drawn on it for his speech this afternoon. This information on the fluidised bed system and the 1348 small heat and power systems for the cities is being studied in the United States, in Germany and in Sweden; and perhaps it is in this area that we can get together a little more closely than hitherto with our European partners.
Finally, I want to touch briefly on the environmental effects. It has been said both in the report and in speeches this afternoon, that new seams will have to be opened. These seams, unfortunately, are set in attractive countryside—the Belvoir Valley is the most obvious one. My Lords, coal is a messy business. It will create a mess to develop and extend these seams into profitability and into filling the energy gap in the late 'nineties. If I may, I shall add just one word of advice, if I dare say that, to the environmentalists: this kind of mess on the countryside is very easily and quickly reparable, in the sense that nature has a wonderful way of managing to "green over" some of the scars created by a new mine or, in the sphere I am more familiar with, a forestry road and other ugly scars that can occur and which, when first created, look most unsightly. As the noble Lord, Lord Wynne-Jones, has said, we may well be faced with the choice that if the energy gap becomes the chasm that he predicts we have either to suffer from a small blot on our countryside for a few years or to suffer from the inability to keep ourselves warm in the kind of weather we are experiencing today.
A final word on the environment is that I have on another occasion attempted to warn noble Lords about the effects of fossil fuel burning in the upper atmosphere —the "greenhouse effect," and so on. If these programmes, or even a half of them, that are being considered in Europe, in the United States and the Third World come about—and I am sure they will— and if, as is quite possible, we receive further information from the scientific studies being conducted in the upper atmosphere indicating that fossil fuels are going to change the climate, then we may well be faced with a choice of having to cut back on our fossil fuel exploitation.
On reflection, and on reading this report, I would say that even if we were told today that the exploitation of fossil fuels will affect the Earth's atmosphere and therefore our weather, I do not believe that we would stop the future of the coal industry because of that. We would 1349 find far more important human and down-to-earth reasons for not doing so. Other countries would do the same. Therefore, I would say that the fossil fuels are going to have to be developed over the next 20 or 30 years. My personal belief is that they will affect the atmosphere and the climate. We are going to have to live with this as one more effect which is man-made; but this effect is much more irreversible than that of the nuclear waste which we are having problems burying. It is a fact that we have created an effect which steadily moves onward and we have no means at all, so far as I am aware—the scientists advise me that is so—of reversing this process. Therefore, I should like to conclude with this warning: although I believe that fossil fuels will have to be developed along the lines we are considering in this report in this country and also in Europe and the Third World, we shall be greatly adding to a process which is far more irreversible than that of the nuclear waste that we appear to be having trouble disposing of for the future.
§ 4.8 p.m.
§ Lord SHERFIELD
My Lords, I intervene in this debate as the newly-appointed Chairman of Sub-Committee F of the Select Committee on the European Communities. I feel I should make some comment, if only to put on record that my own part in its production was minimal, not to say minuscule. The credit for this report rests with my predecessor as Chairman, the noble Earl, Lord Lauderdale, who has been so unfortunately prevented from being in his place this afternoon, and the noble Lord, Lord Wynne-Jones, who took the chair for much of the inquiry and who has made such a powerful speech in introducing the report this afternoon. We are looking forward to speeches from other members of the Committee, who took such an active, strenuous and, indeed, as the noble Lord, Lord Wynne-Jones, has said, heroic part in the inquiry.
We are, of course, discussing an EEC document and this debate is held in the European context. As we have heard, Community coal comes from four Member countries—Belgium, France, Germany and the United Kingdom. But Belgium's production is negligible, that of the French is small, and German production 1350 is mainly specialised—brown coal for domestic consumption; coking coal for home and export—leaving the United Kingdom as the only really large source of every other kind of coal.
There is a small problem here. The Scrutiny Committees are, I think, enjoined to confine their inquiries to Community legislation, but in the case of coal the United Kingdom is such a relatively large producer that it is not always possible or easy to distinguish the matters which are predominantly of domestic interest—investment, technical and production problems and the important question of pricing, to which the noble Lord, Lord Strathcona, referred—from those of Community interest. Nevertheless, I think that an attempt has to be made. Many of the technical problems of coal production in the United Kingdom may be better pursued in depth in some forum other than that of the Select Committee on the European Communities.
I therefore turn to the progress, or rather, the lack of it, which has been made recently in the Energy Council of the EEC. The present picture emerged from a report contained in a Written Answer given on 19th December in another place, on the result of the meeting of Energy Ministers held on 19th December. There were before that meeting useful, if limited, proposals relating to the subsidising of Community steam coal, an investment fund to encourage the construction of coal-fuelled stations, to which the noble Lord, Lord Wynne-Jones, referred, assistance for coking coal and other questions. But no agreement was reached on these, and, indeed, little agreement was reached on anything— a situation which persisted all last year. Could the Minister, in his reply, enlarge a little on the reasons for this?
Is it because the United Kingdom with its great predominance in the European energy field has failed to exercise leadership and initiative? Is it possible that our representatives, by their luke-warm and rather unco-operative attitude to the whole idea of the European Community, have so antagonised the other members that they have laid their ears right back and stuck out their forelegs in the familiar mule-like posture, to resist any proposals which might appear to benefit the United Kingdom, whether or not they, in fact, 1351 do so? Whatever the reasons, the situation is a lamentable one since the Community, after five years of discussion, still lacks the essentials of a concerted energy policy.
Rather more progress has been made in the more general field of analysis and energy forecasting—a notoriously hazardous process involving the evaluation of several variables. A very recent paper from the Commission is coming before the Sub-Committee and, with the approval of the Select Committee, we hope to lay before the House in the relatively near future a report which might form the basis of a more general debate on the prospects of all forms of energy in Europe, and indeed in the world, for it is difficult to localise the problems.
I now turn for a moment to one important aspect of the report itself. It lays great stress on the need to achieve, and indeed to exceed, the figure of 170 million tons of production in the United Kingdom in the year 2000, which the Government regard as an upper limit. I agree, of course, that this is desirable and I am not seeking to contradict anything that the noble Lord, Lord Wynn-Jones, said. But I could find little or no indication in the evidence that, realistically, this figure of 170 million tons was likely to be exceeded, or indeed reached. The chairman of the National Coal Board said in his evidence that the rate of expansion which the Board had had over the last year was as much as they could effectively absorb. Assuming the availability of the increased resources which the Sub-Committee recommend, I think that the absorptive capacity referred to by Sir Derek Ezra will continue to impose a ceiling on development. At all events, I suggest that it would be rash to assume otherwise.
This lends point to a sentence which appears in paragraph 28 of the report:Unless coal can provide more energy than at present envisaged, the Community's likely energy needs in the longer term will be able to be met only by greater expansion of nuclear energy than has so far been made clear to the public".It has, indeed, always been assumed, I think, that whatever success was achieved in meeting the targets for coal, additional nuclear stations would be essential if the energy gap, or chasm as the noble Lord, Lord Wynne-Jones, called it, was even 1352 to be narrowed. The Commission based its forecasts two or three years ago on a very large increase of nuclear power in Europe, and it is already clear that those forecasts were quite unrealistic. If the Community's coal policy, such as it is, is lagging, the nuclear power station building programme is falling far behind. It is worth recalling that one of the strong arguments for nuclear power is that it is not labour intensive, and is therefore immune from the escalation of labour costs which was foreseen and has occurred, and which is likely to persist in the future. Is not the next wage round just ahead of us?
In this country, which once had a lead in all aspects of nuclear power technology, the performance in recent years has been truly disappointing. The environmentalist crusade against nuclear power—most, if not all, of which is wholly sincere— seems to have the Government paralysed. Nuclear power is held to be unsafe and there is a mental block here which the authorities—not only the Government— seem unable to tackle, still less resolve. Disaster after disaster occurs to oil installations and transport, and to chemical plants, while the safety record of the nuclear industry remains unbroken, and as the noble Lord, Lord Tanlaw, said, if I heard him correctly, the nuclear industry would not contribute to the environmental problem to which he referred.
It is true that two new advanced gas-cooled reactor stations have been authorised, but the only proved technology to fill the energy gap after 1990 is the fast breeder reactor; the technology in which we once had an undisputed lead, but in which we are now allowing the French and the Germans to forge ahead of us, although they did ask us to co-operate with them in the current development. What is being done about the fast breeder reactor programme in this country? We have been told, I think, that the Secretary of State for Energy is waiting for a move by the Electricity Council. It is strange to see a Secretary of State skulking behind the sturdy figure of Sir Francis Tombs, but is it really thought that Sir Francis is going to stick his neck out over what, in the circumstances, is an essentially political decision? Has the Minister anything to say about that? Admittedly this debate is about the coal 1353 industry, but coal, still less other sources of energy, whatever the success of their development, cannot alone provide the answer and, as is regularly said in the course of our debates on this subject, time is running out.
§ 4.21 p.m.
§ Lord NOEL-BAKER
My Lords, if I venture to intervene in this debate it is because a long time ago I held the office of Minister of Fuel and Power. In my experience, anyone who has been deeply involved with coal never loses his interest and his enthusiasm for the subject. I held that office very shortly after the nation had taken over the coal mines and had placed them under the management of the National Coal Board. I thought then, and I still think, that that was a wise, indeed an indispensable short-term policy.
At that time, very bitter attacks were made on the principle of the takeover, on the Coal Board, on the miners, on me and on everyone concerned. I used to answer the critics by quoting a great magnate of British industry—if I remember rightly, the Chairman of ICI —who in 1948 or 1949 told a congress of businessmen in Canada that if the coal mines had not been taken over by the nation our production in that year would have been 130 million tons instead of the 200 million tons we were getting and that that gap of 70 million tons would have meant utter disaster for the nation. This was profoundly true. At that time, the coal mines, thanks to the overworking of the mines during the war and to other causes, were in a lamentable condition. No private investor would touch a coal mine with a barge pole. And coal, after the Second World War, was what Lloyd George called it after the First World War: black diamonds. It was of infinite value during our reconstruction after the war and the little that we were able to spare for export was of immense value to our allies.
I believe that the policy that was adopted has been not only a short-term but a long-term success. If we are able to confront the world today as well as we do, it is because coal is still satisfying 40 per cent. of our energy demand. If we had not got that 40 per cent., if we were dependent on oil and nuclear power, how 1354 lamentable would be our situation. Therefore, I am very glad that the Government have now adopted an attitude of positive and sustained encouragement towards coal. I agree with what my noble friend Lord Wynne-Jones said in opening this debate. In the course of his admirable speech, he said that our purpose should be to increase the output of coal to the highest possible degree.
Since the war, the Government have not always encouraged the use of coal. I had a friend in the electricity industry, Sir Robertson King. He came to nationalised electricity from a private company—I think it was the Notts and County. He became famous in the Midlands as the very able Chairman of the East Midlands Electricity Board and the very able President of Derby County Football Club. His knowledge of football and his personal experience were as valuable to Derby in their days of glory as his experience in the Notts and County was to the national boards.
In due course, Sir Robertson King became the Chairman of the Central Electricity Generating Board. He told me, with some emotion, that he had proposed to the Government at that time —it was years ago—that they should make two new power stations ambidextrous, equipping them to be coal fired and oil fired, whichever should prove to be most advantageous. His proposal for coal firing was indignantly rejected, and all the firing that happened happened to him. After a few months he ceased to be the chairman of the CEGB.
I am glad to know that the Government are now encouraging the building of new, large, 2,000 megawatt power stations fired by coal and that they are helping the Electricity Board to use coal instead of oil. I believe that to be profoundly wise. They have agreed to the target which we are now discussing of 170,000 million tons for the year 2000: 150,000 from deep mined coal and 20,000 from opencast mining. For reasons that I shall give, I believe that that target is, despite what the noble Lord has just said in his eloquent and brilliantly argued speech, within the capacity of the Coal Board and I believe, with my noble friend Lord Wynne-Jones, that it can be achieved and, indeed, exceeded.
There are some people who are against mining of any kind, on amenity and other 1355 grounds. They say that it spoils the countryside; it prevents the use of the surface of the earth for other purposes; it desolates fields and woods instead of leaving them in their state of natural beauty. When I was Minister, the opposition to opencast coal mining was particularly fierce. I had to fight honourable Members in another place who came from rural seats and I had to fight the farmers in the countryside, but the case was overwhelming. Opencast coal is of high quality. It possesses certain qualities which are essential for modern power stations. The cost of opencast production is well below that of deep mined coal. Last year, on its opencast operations, the Board made a surplus of £88 million. The damage to the countryside is far, far less than the propagandists say, and in my view is more than made good. For the land is not left devastated as with the derelict gravel pits which disfigure our land in so many places. The soil is meticulously restored to where it was; the fields are made not only as good as they were before, but very often better. Indeed, I would venture the assertion that of all the agencies which reclaim derelict and unsightly land the Coal Board is by far the most important, and that after more than 30 years of open-cast production farming has on balance benefited a good deal, while the amenity of the countryside has been improved. I hope those who oppose opencast mining will give up their opposition. They will help the nation if they do.
There are people who oppose deep-mined coal, not only because it devastates the countryside, but because they say it is wrong that men should be forced to spend their lives deep underground in this dangerous and claustrophobic job. Well, the miners are not forced to choose it; the miners volunteer. The Coal Board have no difficulty in recruiting now the high grade men they want, school leavers and older men. I took part as Minister in a very great operation of recruitment. The Board had allowed the wage rates to fall too low. In 30 months before I took office in that Department they had lost 30,000 men from the collieries of the land. By a big recruiting campaign we got back those 30,000 men in the next 30 months. We had a great battle with the chiefs of the Armed Services. We asked them to release the miners who had enlisted in 1356 the Army, the Navy and the Air Force. After a struggle they agreed that they would allow men to go who had been in the Forces less than six months. Why six months, I asked? Because after six months the miners were all NCOs. In the pits they had developed such resource and courage, such readiness to accept responsibility, such adaptability to unexpected situations that they were essential to the junior command of the Armed Forces.
But the miners all came back very gladly to the pits, because, while it is a dangerous job, they gloried in their work, they gloried in the danger, the adventure and the toil. I believe we can get the manpower needed to expand the coal industry as I hope it will be expanded in the next 20 years. But, of course, it is a very dangerous job, and I think we could not hope to make the policy of expansion succeed unless it had become a great deal less dangerous than it used to be. This is one factor in the Board's success of which I wish to speak.
The coal industry is dangerous in two ways, dangerous to health from dust diseases, dangerous owing to accidents. During the General Election of 1950 I went to a meeting which I shall never forget in Birmingham. As I entered the meeting hall I saw on each side of the aisle from the door to the platform rows of voters standing, chanting loudly, "We are the vermin, we are the vermin". They were protesting, understandably, against a speech made by the late Aneurin Bevan, in which he said, in a passionate but unguarded phrase, that he hated his opponents like vermin. But the chanting ceased when I explained Aneurin Bevan's story, how when he was 12 years old his father had died from pneumoconiosis, how they had had no proper compensation, how his mother had had to go out to do other people's washing to earn money to feed her children, how Aneurin himself had had to go down the pits at that tender age to help his mother, how for long years till he was a grown man he had never been able to afford a holiday. The chanting ceased.
Pneumoconiosis in those days had a very heavy incidence among miners. The Coal Board have had a long sustained and most successful campaign. By ventilation of the pits, by dust suppression devices, 1357 they have reduced this disease until indeed it has almost disappeared. Every year now something like 52,000 miners are X-rayed at 60 pits around the country which are representative of all the collieries, and last year the incidence of pneumoconiosis was only 1.8 per cent. That was lower than the figure for the year before, and it is still declining.
Accidents were a cause of grievous loss and suffering to the miners. Before the war 1,000 men were killed in the pits every year, five a working day, or very nearly. Severe injuries—broken backs from falling roofs, paralysis, things sometimes almost as terrible as death itself— were numbered by the thousand. Last year deaths in the pits numbered 48. True, the manpower has been greatly reduced in number. It was 1 million men before the war; now it is a quarter of a million. The accidents have been reduced, however, not to one-quarter but to one-twentieth of what they used to be. The severe injury rate last year was only 520. The immense success of the long sustained and vigorous campaign for safety in the pits has paid a splendid dividend, not least in strengthening the loyalty of the men to go down the pits. And I would say that, but for that improvement in safety, the expansion of the industry to the degree we hope for would be impossible today.
There is a second factor which strengthens the loyalty of the men. In the coal industry everybody calls it "JPAC" —the Joint Policy Advisory Committee—in which the management of the Coal Board and the trade unions meet together to debate all the policy questions that arise. It was in JPAC that the short-term target for 1985 was debated and agreed. It was in JPAC that the local incentive scheme, which had such great success last year, was worked out and was agreed. With the Government in what are called tripartite consultations, the management and the unions together have worked out this target of 170 million tons. I believe there are other industries in the country which would benefit by a JPAC. I am certain that this consultation, bilateral and tripartite, is a factor which makes possible the great expansion of the industry for which we hope.
There is a third factor, spoken of by noble Lords this afternoon: I mean the 1358 large-scale investment in scientific research and development. Last year the chairman of the Board said £294 million. But the Committee say that that is far too little. In Germany they are spending £80 million a year, largely furnished by the Government. I believe that the Committee are right in urging that our Government should help the Coal Board to expand research. Already it covers many things. It covers the advance predictability of faults in the coal seams; new technologies, like the drying of grass which is of great importance to our farmers; the improvement of domestic appliances for solid fuel is of great importance to our housewives. The research should be still further expanded, but that research has already made a great contribution to the progress and the efficiency of the industry.
Let those who criticise the Coal Board ponder the following facts: in 1947 the productivity of the miners, the output per man shift, was 21 cwt. In 1978 it was 43.1 cwt. It had more than doubled. Perhaps some other industries can show a similar improvement in productivity. I say that in the coal mines that is a remarkable result indeed. Research is devoted not only to the production of coal, but, as a noble Lord said this afternoon, to the utilisation of coal as well. As a result, the efficiency with which the coal is used has much improved.
When I was first Member for Derby in another place we were proud of our municipal power station. We said that it made Derby a clean town. The thermal efficiency of our municipal station was 8 per cent.: 92 per cent. of the energy of the coal went up the chimney to pollute the atmosphere of Derby. The average thermal efficiency of the Electricity Board's power stations today is 38 per cent., and in the Coal Board's research station at Leatherhead they are engaged on further improvement of thermal efficiency. They are working on what they curiously call fluidised bed combustion, and fluidised bed combustion when it succeeds will raise thermal efficiency well above the 40 per cent.
If the Coal Board have a hope of achieving what my noble friend Lord Wynne-Jones asked for, something higher than the 170 million ton target on which we are all agreed, I believe it is because 1359 of the Coal Board's success in safety, in joint consultation, in scientific research, and in the efficiency of their working in the pits, and the efficiency of the Electricity Board. If we cannot achieve that target we shall be dependent on nuclear power, and I am one of those, if the noble Lord who preceded me will forgive me, who consider that the perils of a plutonium economy are very great.
There is a powerful vested interest behind the nuclear power plant industry. In the days when we had a Times newspaper, a journalist who called himself their technological correspondent—I never discovered who he was—predicted that in the 1980s the export of nuclear power plant would bring this country orders worth £20,000 million. Perhaps it was a pipe-dream, but in an industry of that kind there are handsome pickings for many people. But if you are exporting nuclear power plant, you are exporting the power to make nuclear weapons. Nobody denies that that is true. President Carter regards it as a great danger, and he has taken big risks with Germany and Brazil and other countries in trying to prevent them going in for nuclear power plants. If you are exporting the power to make nuclear weapons you may be exporting nuclear war; and if nuclear war once starts, who knows where it will end?
But the objections to nuclear power are more formidable than that. The noble Lord who preceded me spoke of the safety record of the nuclear industry. It is not quite so perfect if you look at the detail at Windscale. Nobody can deny that in the nuclear power plants there is a risk that radioactivity will leak. There was a leak at Windscale not so long ago, and for some months it was concealed from the Government and from the world. In a nuclear power plant there is a danger of explosion; explosion which may be a major disaster almost on the scale of the Hiroshima bomb, with tens of thousands of dead and appalling devastation.
The manager of a power plant in the United States—I think it was called Brown's Ferry, or some such name—said a year or two ago that an explosion in his plant which would have been a major catastrophe for his district had only been avoided by sheer good luck; that there 1360 was nothing he could do to avert the danger. There is also the unsolved problem of nuclear waste, unsolved but very serious indeed.
If there is one thing of which I am more certain than another, it is that nuclear power is not the power of the future; it is not the power that will meet mankind's demand for energy in the centuries to come. Professor Joseph Rotblat said some time ago that the nuclear epoch would be short. In UNESCO in Paris a year or two ago I heard the great French physicist Alfred Kastler say the energy of the future was solar energy, unpolluting and inexhaustible. All the physicists I know believe that solar energy is sure to come and may come very soon. We must bridge the gap until it meets the expanding demands of future generations of mankind, and for that gap I hope to the utmost possible extent we will put our faith in British coal.
§ 4.52 p.m.
§ Lord HINTON of BANKSIDE
My Lords, the report of your Committee seems so good, so concise and so explicit that I wish I could claim some credit for it, but although as a Member of your Lordships' Sub-Committee F, I sat on its initial meetings, I was engaged on other business of your Lordships' House during the later stages and had no part in the preparation of what seems a model report.
In moving its adoption, the noble Lord, Lord Wynne-Jones, elaborated on it and extended it to show the implications of the problems that we are considering on the EEC countries as a whole; many noble Lords who have spoken today have usefully added to the information which is contained in the report. I am quite certain that later in the debate, when the noble Earl, Lord Halsbury, speaks, he —because he spent a large amount of time and, I believe, a large amount of money, in making a detailed examination of conditions in pits—will add to the information that noble Lords have been given.
I should be wasting the time of the House if I elaborated on what has been or will be said, but I hope I may be helpful in trying to put our domestic energy problem and the energy problems of the EEC 1361 into a global context because energy supply and demand can only be considered globally. Many studies of this global problem have been made and, of these, I think the best was done by the World Energy Conference. With its membership of 70 countries spread all over the world, the World Energy Conference was able to call on all those member countries for information and was able to arrange for that information be to evaluated by top experts. The survey they did was projected to the year 2020 because it was felt that although in so many other forecasts the year 2000 had been taken as a terminal date, that date might be misleading because in the year 2000 the supply of oil will be in its initial stages of waning and energy supplies might therefore be still in a transitional stage.
The World Energy Conference wisely accepted the fact that all forecasts of energy demands have been wrong. Bitter experience should have taught us the truth of that in the United Kingdom. I think it would be indelicate to attach names to the committees or Ministries who have made forecasts of energy demand in the past, but it is fair to group them altogether and say that while every one of them has been wrong, some of them have been devastatingly and expensively wrong.
Accepting that fact, the World Energy Conference concluded that the best it could do was to paint a broad brush picture of the future. In doing that, one basic assumption they made was that in real terms the price of energy would double in the next 25 years. The surveys, made by the resource groups—the groups which evaluated the energy and fuel that was likely to be available—came to the conclusion that in the year 2020 the available supply would lie between 18,000 million and 23,000 million tons of oil equipment. If a higher price than the one they assumed is adopted, there will of course be more energy available and the demand for energy will almost certainly be rather less.
The scenarios for energy demand are extremely complex. They have to allow for growth in global gross economic product and they have to allow for elasticity factors for energy consumption related to GNP per capita and related to the price of energy. Those various 1362 scenarios can be evaluated only by the use of computer modelling which is far too complex for me to understand, but the broad brush answers that were churned out by the computers showed that globally, energy supplies can meet energy demand in the year 2020 only if world economic growth drops to a level of 3 per cent. and if there is also a high response to rising energy prices.
If one looks back over the last 50 years, world economic growth over that period growth has been at the rate of 3 per cent., but if one looks back over only 15 years, the period when oil has been grossly under-priced, the rate of growth of global economic demand has been considerably higher, just under 5 per cent. The difference between that recent artificially high rate of growth and the reduced rate of growth which can reasonably be expected will, I think, be extremely uncomfortable, and particularly uncomfortable when one remembers that the rate of growth in the old industrialised countries must be lower than 3 per cent. because the demand in the developing countries of the world will be considerably higher, and let us remember that the United Nations' forecast is that early in the next century more than half the population of the world will be living South of the equator. The figure that was assumed in the evaluations was 5.8 per cent., but in fact the developing countries are demanding between 6 and 7 per cent., and that rate of growth can be made consistent with a global rate of growth of 3 per cent. only if the rate of growth in the old industrialised countries drops below 3 per cent. I leave it to economists and politicians to say what the result of such a drop in the rate of economic growth will be.
One alarming feature of the scenarios for 2020 is that, whereas at present electricity meets 10 per cent. of the global demand for secondary energy, by the year 2020 it will have to meet about 17 per cent. of that demand. That is disturbing because, with all its factors of convenience, electricity is an extravagant user of primary energy; and that is shown by the fact that although the demand for electricity by the year 2020 has gone up by six times, the demand for primary energy to supply that quantity of electricity has gone up by 18 to 21 times.
1363 It seems quite inevitable that electricity must make up for much of the shortfall in oil supplies. How is that electricity to be produced? The World Energy Conference's analysis assumed that to the extent of 60 per cent. it would be met by nuclear power. I doubt whether that is a realistic figure. Apart from the delays arising from ill-informed environmental opposition, the estimates of the obtainability of virgin uranium show that there is likely to be a uranium famine before the end of the century, and the fast reactor will not be in use sufficiently early to relieve that shortage of uranium. It is only by increasing the global output of coal that the global demand for energy can reasonably be met. Already on the World Energy Conference's estimates, which assumed that nuclear power would supply 60 per cent. of the secondary energy requirements, this required that the global output of coal should be increased by between four and five times by the year 2020. In fact that is a figure that will be difficult to achieve, and the world will need every bit of coal that can be produced.
I have tried to paint this global back-cloth of energy supply and demand because I believe that it is only against such a backcloth that energy supplies can be considered. Oil and, with rather more difficulty, gas are easily transport-able, and with the provision of a suitable infrastructure it will be equally easy to transport coal. Those transportable energy sources will go to the countries which are best able to afford to pay for them. The EEC is not well placed. Its indigenous energy resources are limited. Of all the EEC countries we are in the most favourable position, but while it is a political and economic judgment which I should not venture to make, I have some private doubts as to whether it would be economically wise for us extravagantly to use our indigenous energy supplies while lying off-shore of a Europe which was starved for energy.
The conclusion is that coal economically produced should be as much an international commodity as oil is today. Coal has been thought of in the past far too much on a domestic, national basis. It must be thought of as an international commodity, and we ought to remember 1364 that even though we in the United Kingdom may not in the next 15 years need for our home market all the coal that we can produce, it takes 10 years to open up a new coal face, and we ought to expand our capacity for mining coal at competitive prices to meet a demand which will inevitably grow.
How is a market to be found for coal which we shall not be needing during the next 15 years? There are, I think, some possibilities of doing this. It could of course be done by Government subvention. On the other hand, our present uncompetitive coal prices reflect the cost of coal which is raised from old mines. Would it be possible, either by subsidy or by creating a body which operated only new mines and gave priority to exports, to overcome the difficulty and so to find an export market for the coal which we undoubtedly have?
§ 5.7 p.m.
The Earl of HALSBURY
My Lords, speaking last in the debate before we hear from the Government, I wish to say what a privilege I regarded it to be associated with the report and the Committee, and what a remarkable achievement it is of your Lordships' House to have been able to mount such a Committee at all. What other Legislature in the world could command the services of an ex-professor of chemistry from Newcastle University, with many years experience of industrial research in the field of coal, coke, and tar; the ex-chairman of the Atomic Energy Authority; and the ex-chairman of the Central Electricity Generating Board? I regard it as a privilege to have sat under the chairmanship of the noble Lord, Lord Wynne-Jones, and to have worked alongside my two very distinguished colleagues, the noble Lords, Lord Sherfield and Lord Hinton of Bank-side, who certainly was there, and away only for the last few days, despite his modest disclaimer.
My points will really be emphasising what has already been said. My first point is that there are no magic numbers in nature, in economics, or in history. There is nothing special about the year 2000. It bulks as a kind of unattainable date in our imagination because we have always thought of the next century, and written it off, as if it was like the Greek 1365 calends—a date that would never come. But, my Lords, it is coming closer. It is only 21 years ahead. If I live to the year 2000 I shall be only two years older than the noble Lord, Lord Brockway, who celebrated his 90th birthday this year, and I shall be two years younger than the noble Lords, Lord Shinwell and Lord Barnby, who are active in your Lordships' House. Although I do not know whether I shall reach such an advanced age and be active at that time, I cannot rule it out as a possibility that in 21 years' time, if the hereditary principle is still in operation, your Lordships' children may be listening to me saying, "I told you so." We really must realise that it is only 21 years ahead, and of those, 10 years would be taken up with the necessary planning of any new mines over and above what are planned today because of the lead times. We have only until 1985 to make provision for anything that might happen between 1985 and the year 2000. We have not got 21 years. We have, at the moment, only about eight or nine years before we must start taking some very difficult decisions—a point to which I shall return later.
The noble Lord, Lord Tanlaw, suggested that the Coal Board was being treated as a sort of dinosaur, and that the sooner it got down to the job of doing some research and development—I hope I am not misrepresenting what he said —the better. I do not know what his source of information is, but if your Lordships will forgive the play on words, I would say that it is a bit of a dino-source, because it belongs to a very long time ago. The Coal Board is in the current stage of consummating the active research and development of years past, all of which is coming to fruition now. It is an inspiration to go along the 500-yard coal-face of a mine like Kellingley, working an 8-ft. seam, and to see it manned by only 15 men. I shall come back to the productivity of these faces later on, but I have seen these advanced technology faces under innumerable conditions. The thickest face you can work is about 12 feet, and the thinnest face you can work is about 4 feet. The steepest face is in Seafield Colliery under the Firth of Forth, which is also a very wet mine. As the noble Lord, Lord Wynne-Jones, said, it is a very steep one, too, and going up the face is rather like an obstacle 1366 race up the Idwal Slabs, in North Wales. It is a cross between a combat course in the Army and a rather strenuous VD, I should say, in rock-climbing terms.
The technical problems of providing us with the world's most up-to-date coal industry within the next ten years have been solved. It is a question of bringing them all together. Bevercotes, which tried to bring too much together too early on, was a technical mistake, but it will come right in the end. Now, a rather more gentle approach is indicated, and your Lordships can see a particular technology being worked out in one mine and another technology in another mine. The mistake of trying to put them all together in the same mine before each has been worked out independently is no longer being made. But, given a decade, they will all come together in one set of mines, and your Lordships will be quite surprised at the potential productivity of our mines then.
We shall always need a light, transportable liquid source of power for the internal combustion engine. We shall always need gas in the mains for the housewife, and for domestic heating. I am quite satisfied in my own mind that the technological problems of converting coal into a light, transportable source of fuel and into gas have been solved, that the pilot plants are in operation now, but that the economic problems of coupling this to the wellbeing of the engineering industry which is going to turn out the plants when we need them have not been solved. Already the Americans are putting down full-scale plants in America based on pilot plants in this country; and, unless we ourselves put down full-scale plants, when the time is ripe to order them we shall have to go to America for the know-how, as so often before. My Lords, that is something "up with which we ought not to put".
Of course, a new process can be killed economically by the cost accountants. If you are going to cost coal at the national average into a gasification plant and then price gas out at the price at which the Gas Corporation can buy natural gas, the coal being much too high in price and the gas much too low, then you will kill the process. Such new plants ought to have the benefit of being sited close to the 1367 cheapest source of coal, like Selby; should take coal in at the cost of production or the transfer price, and deliver gas out to the Gas Corporation at an economic figure, if necessary with the Government having to bridge the gap for the time being. If you want to get a new thing going you must pay a premium for doing it; and if we want these plants, the products of an engineering industry which is standing by waiting to make them, then we must provide for the prosperity of that engineering industry, and this is not being done at the moment.
Then I come to the problem of productivity in these mines, because the potential production per man-shift out of the mines is much higher than the actual production, which is much too low. One hears figures of production in some mines being only 40 per cent. of potential. In many cases, during the difficult phases of getting the bugs out of the coal-face, making the power shearers and the armoured-face-conveyors work, it was regarded at one time as quite a triumph to be able to drive a power loader once across the coal-face and back in the course of a shift. The thing could be done twice, but when people have become accustomed to doing it once, then they begin to think perhaps you can get through it in four hours and get good pay. Maybe a four-hour stint, with two stints per shift, is the right way to run a mine in the future. And I have in mind what the noble Lord, Lord Noel-Baker, said about the conditions underground in a mine. They certainly are not as dangerous as they used to be, but they are very often uncomfortably hot and wet and, though one does the best to kill dust and so on, they are non-ideal and we have to wake up to the possibilities of rethinking the way we deal with workers underground from the standpoint of what we demand of them.
If they can run a power loader to and fro once per stint and then hand over to a second stint, let me do some costing, more or less in my head. The labour cost is about 50 per cent. of the price of coal, and the standing charges are about another 50 per cent. So if you have one unit of each and get one unit of coal then you have got two units of cost per unit of output. Now supposing you doubled your labour costs by running two shifts. Then 1368 that is two units of cost; you have still got your one unit of indirect cost as before, total three with two units of coal out. Your cost of production is down from two units to 1.5. That is the advantage you get of taking highly expensive machinery and driving it to saturation by employing more shifts and more people on it instead of fewer people. This involves entirely new thinking and its philosophy must be the subject of more publicity. The social pattern of people at work has in fact got to be re-thought.
So we come to the crunch—the crunch in 1985 as I reckon it—when we are going to be asked to make very significant investments in further coal production at a time when there may be a glut of coal, to be taken into account with the current supplies of oil. This was dealt with very adequately by my noble friend Lord Hinton and it was also dealt with by the noble Lord, Lord Wynne-Jones. It is going to be a very difficult decision. I am not sure that under the present Party political system either Party is really at all well placed to take this type of nitty-gritty decision to go on investing money in something which is going to give you future productivity when you already have an excess in this day and age and there are other demands for the money. Exactly how that will be handled I do not know, but this is the sort of situation where as a nonagenarian I shall appear before your Lordships' House, if I ever do, and say, "I told you so. I told you we would not make the investment and we have not; now look at the mess we are in."
So far as total fuel requirements and total fuel supplies are concerned, I very much share the doubts of my noble friend Lord Hinton. I too have watched all these calculations going forward and I too have been disillusioned by the very large errors in the calculations. I too have been disillusioned by all the wrong decisions we have taken. We panicked into too much nuclear after the Six Day War and we have been living with the consequences ever since. I honestly cannot go along with the noble Lord, Lord Noel-Baker, in thinking that the nuclear industry is a sort of shadowy collection of sinister people making enormous sums of money on the side. As an ex-member of one of the syndicates that used to build nuclear power plants, my principal concern was not to make illicit profits but to 1369 avoid losses through technological factors not going according to plan. The nuclear industry in this country is not a very enormous industry, nor do I think it should be, as I have said before in one of your Lordships' debates. When you have a new technology growing as fast as this is growing you ought not to make an over-investment and, to my mind, I would not invest any more in nuclear than would suffice to keep going and prosperous the relatively small nuclear industry we have got.
Of course, the first call on its expertise and skills ought to be the fast reactor. I cannot tilt a lance at this stage at the noble Lord, Lord Noel-Baker. I have said it all before in your Lordships' House. You cannot make bombs out of plutonium from the fast reactor. It has the wrong composition. The weapon-grade plutonium must be made from the very earliest-stage plutonium of the thermal reactor before the plutonium itself is over-radiated with neutrons which turns it from plutonium 329 to plutonium 240 which is spontaneously fissionable and keeps the atom bomb fizzing off, as it were, instead of waiting, until it is exploded with one bang. It takes an enormous intellectual effort to design something to go off as an atomic bomb. It does not go off easily. It must be designed to do so. I do not think you can get weapon-grade plutonium—though I am not an expert on this—out of the type of fast reactor that we have in mind.
I think that we ought to lay our plans for the possibility of our requirements of coal having been under-estimated by all the people who have worked on it in the past. I think that we ought to be prepared, if necessary, to find very substantial further investment which, in one sense, cannot be wrong; because if you over-invest in high-productivity equipment you always have the opportunity to release low-productivity equipment and send it to the scrap yard. The more that the mines are bang up to date then the easier it will be technologically—though not socially; we must have proper plans for doing this, that is to close down some of the older mines. In a sense, investment in this field cannot be wrong. By the pricking in my thumbs I believe we have under-estimated our coal requirements for the future rather than the reverse.
§ 5.22 p.m.
§ Lord STRABOLGI
My Lords, with the noble Earl, Lord Halsbury, we are privileged today to have before us this important and informative report by Sub-Committee "F" of the European Communities Committee, and we are fortunate in the opportunity afforded the House by my noble friend Lord Wynne-Jones to debate the coal industry in the United Kingdom as well as the Committee's report. If I may say so, I think it has been a most notable debate even by the standards of your Lordships' House. We have been fortunate to hear speeches by the noble Lord, Lord Hinton of Bankside, with his unrivalled knowledge, and by the noble Lord, Lord Sherfield, the new chairman of the Sub-Committee. May I say how much I welcome the instructive and informed speech of the noble Lord, Lord Strathcona. My only regret is that we have not had the advantage of a speech from the noble Earl, Lord Lauderdale, who has been held up by weather or trains or, probably, both. It is the first debate on energy matters in which I have taken part in which the noble Earl has not taken part; and I miss his presence.
The Committee are to be congratulated upon the wide-ranging scope of their inquiries. Here I should like to join with my noble friend Lord Wynne-Jones in paying a tribute to the late Lady Tweedsmuir who instigated the idea of this report. The coal industry in this country has seen many changes during the 30 years since nationalisation. A lot of things are said these days, I think thoughtlessly, by members of the public about nationalisation. I welcome the speech about nationalisation, putting this into perspective, by my noble friend Lord Noel-Baker, a former Minister. It was right, also, I think, of him to stress in his moving speech how conditions have improved in the pits compared with the old days.
In the early post-war years after nationalisation, the industry enjoyed a boom period and was borne along by a tide of optimism. Then, in the 'fifties and 'sixties, came the strong competition from cheap and plentiful supplies of oil, supplies which seemed, on planning time scales at least, to be limitless. In the face of this competition the industry underwent severe contraction, the effects 1371 of which are still very much with us today. This, I think, must be the responsibility both of this Party and of the Party of noble Lords opposite. It is a mistake which has been fully recognised now. There lies before us another exciting period in the history of the industry. Reserves of oil and natural gas are recognised to be finite but reserves of coal are still very extensive; the long period of decline of the coal industry has been reversed and it is once more becoming a major growth industry. The prospect is a bright one, as the noble Lord, Lord Strathcona, said, although, I noted, with some qualification.
The Government regard the tripartite machinery as an essential feature of the forward planning of the industry. It is probably true to say that without it the present investment programme in Plan for Coal would not have been instituted so successfully. The Government in endorsing the Plan for Coal demonstrated their confidence in the future of the coal industry by making available the massive capital funds that the NCB needed to implement their ambitious and imaginative programme. They thereby had the courage and the commitment—the only Government so to do in Western Europe —to give their blessing to a strategy for expanding the coal industry. This factor should not be overlooked by noble Lords in considering the pace of the industry's development in the future.
As the Committee noted, progress with Plan for Coal was reviewed in 1976. By then, we had experience of the effects of the unprecedented increases in the price of oil which had caused Governments throughout the world to look afresh, often for the first time, at their energy programmes. There were some changes in composition but the primary objective of 135 million tons of output by 1985, of which 120 million tons will come from deep mining, remained unchanged. It was at that time that the NCB also took its look forward to the year 2000, identified a possible range of demand for coal and proposed a planning objective of 170 million tons output by that date. The Government confirmed their support for Plan for Coal and said that they intendedto bring the National Coal Board's 'Plan 2000' into its consideration of long-term national policy … with the Energy Commission".1372 My noble friend Lord Wynne-Jones said that he thought that Plan for Coal set only a modest target for expansion. Far from it! The coal industry, in common with other energy industries, cannot change rapidly. The lead times in creating new capacity and bringing it into full production are long—of the order of 10 years for completely new mines on green-field sites. There can be no sudden transition from decline to expansion. Collieries and faces once closed are entirely lost. The effects of contraction and under-investment will continue to be felt for some years after a decision is taken to reverse the process. The British coal industry is the only one in Europe now having a strategy for expansion, and thus is faced with a formidable task in building up expertise, management, resources and morale to enable it to undertake this new and important investment programme. The target of 135 million tons output by 1985 was, therefore, ambitious and imaginative and clearly called for a great deal of confidence, drive, enthusiasm and optimism on the part of Government, management and the unions.
But, my Lords, would it be practical to aim higher, as my noble friend suggested? The majority of the investment called for under Plan for Coal is now either in progress or has been approved by the Board. The review of Plan for Coal in 1976, as published in the tripartite group report, showed that a contribution from new mines had been revised downwards from 20 million tons to 10 million tons. The target of Plan for Coal was still regarded as obtainable because more additional capacity was being developed, and existing mine exhaustions were expected to be less than initially thought.
The slower rate of development of entirely new capacity has important lessons, I suggest, for the future because further expansion will almost certainly see an increasing proportion of additional capacity coming from new mines. Some new mines are likely to be developed in areas new to mining, as has been said today. The growing public interest in the environmental and ecological implications in any new developments, as was referred to by the noble Lord, Lord Tanlaw, must bring into question the ease with which planning and environmental aspects can be properly dealt.
1373 The Committee in their report have expressed concern that the Government are not supporting a target nearer to 200 million tons of output in the year 2000 and that we may consequently find ourselves with less energy than we need to sustain the economy. The Committee have suggested:that if a larger, more imaginative programme for the coal industry could be established … in the United Kingdom, there would be a strong case for better investment".A programme that involves the creation of 4 million tons coal production capacity each year between the mid-1980s and the end of the century—most of it in the form of entirely new mines—can hardly be said to lack imagination. Moreover, in the Green Paper the Government showed themselves to be fully alive to the need to ensure ready markets for the coal produced, as well as the need to produce the coal.
§ Lord WYNNE-JONES
My Lords, will my noble friend allow me to make one comment at this point? The Committee was very much influenced by the evidence that was given about the expansion of the Polish coal industry. It has gone up— I think I am right in saying—to over 300 million tons of production a year from a figure that was lower than ours. They have done this over a relatively short time. So we were not putting forward what we thought were entirely unrealistic ideas, but rather ideas that had been adopted by the Polish industry and indeed include the target put forward by the Coal Board.
§ Lord STRABOLGI
My Lords, I note what my noble friend has said. The conditions are probably different in the Polish industry. The noble Lord, Lord Strathcona and Mount Royal, asked whether it would not be sensible to regard the contraction in demand for coal currently as a reason for halting investment in new production capacity now and building it up later. This was of course a very interesting argument, and one well worth making. It would not be realistic, though, to run down investment now with the intention of building it up later. It takes time to build up exploration, planning teams and resources. They can be used efficiently only by a steady programme of creation of new capacity. Moreover, a cessation of the investment programme now would jeopardise the 1374 prospects of achieving even 170 million tons of output by the end of the century.
The National Coal Board, in its evidence to the Committee, said that it wouldbe fully stretched indeed in bringing forward and approving and commissioning year by year the equivalent of two 2 million ton mines every year from now to the end of the century. To do more would be an enormous task".The Government believe very firmly in the future of the coal industry. But at the same time, they see the right strategy as one which the industry can achieve while steadily building up the experience and resources which will enable further expansion to take place if that is thought necessary as part of the national energy policy.
My noble friend Lord Wynne-Jones mentioned too the question of the Generating Board and coal burn. The CEGB have a statutory obligation to produce electricity at minimum cost to the consumer. This is achieved through the merit order system, where demand is met from those stations with the lowest variable costs at any given time. Fuel cost and station efficiency largely determine merit order position. The coal burn level depends on electricity demand, the amount and efficiency of coal fired capacity and the relative fuel prices, particularly of course of oil. Nearly two-thirds of the CEGB's capacity is coal fired at present.
The CEGB coal burn in 1978–79 is expected to be about 72 million tons, including about three mtce resulting from the assisted coal burn scheme. The range of flexibility quoted by the Generating Board in evidence to the Select Committee of 55 to 85 mtce annual coal burn in 1985 does not imply that coal burn will vary from one end of this range to the other at the drop of a hat. In fact, the Board expects coal burn to lie in the range of 65 to 70 mtce in the early 1990s. It could be higher if the coal is available at the right price. They expect to have the capability to burn 90 million tons in 1990. Additional coal burning capacity is not therefore necessarily going to be required to increase coal burn up to the early 1990s.
The Secretary of State for Energy is committed to keeping the development of our energy policy under regular review.
1375 It is also an essential element of the strategy outlined in the Green Paper that options should be kept open as long as possible. The present investment programme for the coal industry cannot be said to be diminishing any options for the future. The noble Lord, Lord Strathcona and Mount Royal, also rightly mentioned the question of imports. Imports of coal in 1978 were about the same as for 1977 and stood at just over 2 million tons and, in view of our own total output of about 120 million tons, do not take up a very large proportion of our internal market. Even so, every effort is being made by the Government to reduce the level.
There are two main contributions to the imports: namely, steam coal under a single contract to the CEGB, which accounts for about 1 million tons a year, and coking coal imports for the BSC, which amounts to about 1½million tons a year. For this winter, the CEGB have agreed to cease imports under their contract and to find alternative ways of disposing of the coal. So far as coking coal is concerned, discussions are currently taking place between the NCB, the BSC and Ministers to see how these imports might be kept to an absolute minimum. Of course there are certain technical difficulties, about which the noble Lord, Lord Strathcona and Mount Royal, knows, with our own coking coal.
With regard to imports, again, the noble Lord, Lord Strathcona, mentioned Australian steam coal and the CEGB have a contract for one million tons a year of Australian steam coal which was entered into in 1974 as a result of the miners' strike. I am not trying to make a political point here. It runs to the 1980s. To minimise transport costs, the coal is shipped via large Continental ports, and for this winter the CEGB have agreed to dispose of coal on the Continent and not tranship it to the United Kingdom.
§ Lord STRATHCONA and MOUNT ROYAL
My Lords, is the noble Lord going to leave that subject now? My real point about imports was not so much concerning imports into this country as into Europe as a whole. I am quite aware that imports into this country are relatively insignificant in terms of impact on demand; but the point is that the 1376 EEC is importing very substantial amounts of coal, I believe, and one of the ways in which we might use excess capacity available in this country is to persuade our partners to take some coal from us.
§ Lord STRABOLGI
My Lords, I am glad the noble Lord made that point, because it enables me to say that during 1978 exports of coal were nearly half a million tons higher than in 1977 and stood at 2.26 million tons. That was achieved in spite of very severe competition from third country coal, the prices being very much lower than the National Coal Board's prices. Of course, exports consist largely of steam coal and the rest is mainly anthracite dust. In addition there are about half a million tons of coke exports, but there are few opportunities to export coking coal since we produce insufficient of the best quality—that is not our fault but the fault of geology.
I should like to say just a few words about research and development. The Committee were concerned that very little Government finance is being devoted to coal industry R and D. Your Lordships will be aware from the evidence of my honourable friend Mr. Eadie, Parliamentary Under-Secretary of State, that the Committee completed their examination ahead of publication of a report Coal Technology: Future Developments by the working party on research and development in the coal industry's tripartite group. The Government agreed, on the basis of the Board's recommendations, to provide up to £20 million for the development of coal gasification and liquefaction in the period to March 1983.
My noble friend Lord Noel-Baker said he thought that not enough was being spent on R and D. The National Coal Board's total expenditure on R and D over the five years to 1983 will be well in excess of £100 million.
The noble Lord, Lord Tanlaw, referred to the question of gasification. This is a very important development. It was not a snap decision by the Government: it grew out of the exercises firstly within the R and D working party and subsequently, its successor, the tripartite group. The working party addressed itself to the task of identifying the technologies this country would eventually need to supplement 1377 supplies of natural gas, motor fuels and chemical feedstocks as we moved out of self-sufficiency in oil and natural gas around the turn of the century.
The Government are also giving financial support to the National Coal Board to participate in projects under the auspices of the International Energy Agency, recognising the importance of international collaboration on particularly expensive demonstration projects. I believe this underlines the importance the Government attach to the research and development effort on coal technology for the future of the industry.
The noble Lord, Lord Sherfield, whose contribution I listened to with great interest—and, if I may, I should like to congratulate him on having been appointed chairman of the Committee—raised the question of the fast reactor. Research of fast reactors has been under way in the United Kingdom for over 20 years and a prototype is in operation at Dounreay. The Government are reviewing their policy in this area, including the possible construction of a commercial-scale demonstration fast reactor. No decisions have yet been taken, but any proposal to build a reactor of this kind will be subject to a wide-ranging public inquiry. The Government are considering what might be the most appropriate arrangements and timing for such an inquiry.
Before concluding my remarks, I should like to say something briefly about the endeavours being made within the framework of the European Community to provide support for the preservation and development of coal industries of Member countries. The European Community has recognised the importance of the Community's coal industries but so far Community funds provide only for a limited amount of financial support. This has not been for lack of any effort on our part. In fact, United Kingdom Ministers have pressed very hard on the Council of Ministers to secure recognition that the Community's coal industries need support if they are to make their full contribution to the Community's economic wellbeing.
During the last few years, the Commission have striven hard to meet the various interests involved and have put forward four new coal proposals but only the most modest of these, and one which 1378 involves no finance, has been agreed. That is a scheme of surveillance of third country imports of steam coal. Under it, the volume and price of imports are monitored on a quarterly basis and the results reported to the Community; but there is no provision for action should a potentially dangerous or damaging situation reveal itself.
The noble Lord, Lord Sherfield, mentioned the question also of Community coal. Although the Government have given strong support to individual coal proposals, other member States have sought to link coal with other aspects of energy policy such as oil refining. My right honourable friend the Secretary of State has made it clear that he is not prepared to make concessions in major areas of energy policy so as to secure some minor advantage for our coal industry since the proposals really have been very modest and the net benefit to us would be very small.
Despite this lack of progress so far, the Government intend to keep pressing the case for coal either through the proposals on the table or through a new approach. For example, we have suggested that there might be support for coal consumption near the point of production so as to minimise the very heavy transport costs often associated with coal utilisation. I can assure your Lordships that no effect will be spared in seeking proper Community recognition and support for the Community's coal industries.
I should like to say a brief word about the environment, because that was raised by the noble Lord, Lord Tanlaw, and by my noble friend Lord Noel-Baker. Undoubtedly, great damage has been caused in the past, when coal was won with a blatant disregard for the environment, and the scars remain for all to see, as my noble friend Lord Noel-Baker reminded us in his moving speech. But we should not judge the future by the past. The National Coal Board are making great efforts to reduce to a minimum the environmental impact of their activities. Indeed, they have now acclaimed experts at restoration of land after opencast working, and in some cases the final result of their efforts is an improvement, as my noble friend said, on even the original state of the land. In their new 1379 projects, such as Selby, architects are employed to harmonise the workings with the environment and efforts are made to dispose of waste as unobtrusively as possible or, as at Selby, to use it to provide landscaped screening.
I think the Select Committee are right to express their opinion about the future as they see it, and to question the part coal will have to play in our future energy strategy. There can be different views, such as the CEGB's view on coal burn or coal targets favoured by the Select Committee. The Government are willing to examine all these views. They are committed to an open debate on energy policy and to a thorough discussion in the Energy Commission; and they welcome the contribution made by the Select Committee to this process. I can assure your Lordships that the Government remain committed to coal playing its part, and that in setting future planning objectives for the industry they will pay full regard to the needs of national energy policy.
§ 5.50 p.m.
§ Lord WYNNE-JONES
My Lords, I should like, first, to say that it has been a privilege to take part in this debate and to have so many able people taking part in it. A very unexpected speech, and one which I greatly appreciated, came from my noble friend, Lord Noel-Baker. Certainly, I never thought when this Motion was put down that it would induce Lord Noel-Baker to get up, and I personally am very grateful to him for having taken part in the debate.
With regard to the main subject of the debate, I thank my noble friend Lord Strabolgi for his reply. He will forgive me if I say that I never expect from the Department of Energy a reply which is anything other than somewhat on the defensive. This report was not meant to be an attack on the policy of the Department of Energy. It was meant to be a clear analysis by the Committee of what we saw was happening, with proposals which we hoped would encourage the Department of Energy. I hope that the Department of Energy will still consider that this is meant to be an attempt to encourage them, and is not meant to be a criticism.
§ Lord STRABOLGI
My Lords, I am sorry to interrupt my noble friend. I did not think that my speech was defensive, and I am sorry if he thinks so. It is not our policy to be defensive. In fact, I thought it was rather an adventurous speech, and not in the least defensive. We are, however, realistic.
§ Lord WYNNE-JONES
My Lords, I thank my noble friend for what he said, but I must point out that the opinion elsewhere is very different from the kind of opinion that we get from the Department of Energy.
I have here a resolution of the European Coal and Steel Community's Consultative Committee, which met at Luxembourg on 30th November last, and in this they said:Despite the continuing weakness of the Community's coal industry's market, imports of coal from third countries have risen in the past four years from under 30 million tons to 46 million tons and a further increase is likely".They go on:Wider ranging measures should be supported by the Community as a whole, as a matter of solidarity, to prevent a further deterioration of the position of the coal industry and to avoid the danger of irreversible closures of production capacities.".This is what in the Committee we were afraid of. This is exactly the point: these closures are irreversible. We implore the Government in this country to increase their targets, and, not only that, but to urge the Community to do the same, because the Community's targets are even more deplorably low. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.