§ 3.2 p.m.
§ The Earl of KINNOULLMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the current development programme for extracting oil from coal, and how soon it is anticipated that this development will prove viable.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie)My Lords, the National Coal Board, with financial assistance from the Government, is in the final stages 358 of design studies for two 25 tonne-day pilot plants to develop further the liquid solvent extraction and supercritical gas extraction processes upon which the board has been working since the early 1970s. Legal formalities are expected to be completed soon for support from the Commission of the European Communities under the EEC Alternative Energy Demonstration Programme and British Petroleum. A decision whether or not to construct the pilot plants is expected later this year. On present projections, the Department of Energy view is that liquefaction of United Kingdom coal is unlikely to be economic much before the turn of the century, and the time-scale for developing the NCB technology is consistent with this view.
§ The Earl of KINNOULLMy Lords, while thanking my noble friend for that informative Answer, may I ask him to tell us what is the likely funding programme that the Government might reinvest from the revenues of the North Sea oil in this important alternative energy?
The Earl of GOWRIEMy Lords, your Lordships will often have heard from Ministers of the Treasury horror at what could be called hypothecated revenue or earmarked revenue, but obviously all funding of our research programmes does come out of public expenditure and public expenditure is, in these difficult times, aided by North Sea oil.
§ Lord HARMAR-NICHOLLSMy Lords, in view of the criticism directed at us over the past few months, that we have not used the facilities of the European funds because we have not applied in time for grants, have we in this particular case made all necessary applications to make certain that in regard to this extra supply of energy from which all will benefit, the European funds that are available have been applied for?
§ Lord STRABOLGIMy Lords, acknowledging the great work done by the National Coal Board's research station at Stoke Orchard, and remembering that very little research work of this kind was done by the individual 359 private colliery companies, would the Government not recognise that this is one further justification for the nationalisation of our great coal industry?
The Earl of GOWRIEMy Lords, I have never ceased to marvel at the ingenuity with which on every single coal issue the noble Lord succeeds in bringing out that point.
Lord CAMPBELL of CROYMy Lords, does not this subject very largely depend upon world prices of crude oil, which have been increasing alarmingly, and may it not before too long be cheaper to extract oil from coal than to extract oil from OPEC?
The Earl of GOWRIEYes, my Lordshappily, we are still able to extract oil from our own resources, but I take my noble friend's point.
Lord SHIN WELLMy Lords, would it not be advisable for the Government, before deciding on a pilot scheme, to delve into the history of this process? Is the noble Earl aware that the first pilot scheme was adopted at the end of the First World War at the Metropolitan Gasworks, now abandoned? Hundreds of processes came before the Ministry of Mines, when I happened to be the Minister there, and before the Ministry of Fuel and Power was set up. Is the noble Lord aware that it is impossible to make an industry of this kind viable because it cannot compete with ordinarily extracted oil or with coal itself? Before indulging in expenditure on a pilot scheme, just examine the history of the hundreds of projects and see exactly where you are going.
The Earl of GOWRIEMy Lords, I am well aware that the history of the Coal Board and these schemes is not unconnected with the noble Lord's own very distinguished career. I perhaps can answer him, and amplify an answer that I should have given to my noble friend Lord Kinnoull about the general level of Government support, by saying that the agreement signed in February 1979 between the department and the Coal Board provided for Government support of up to £;.8 million for design studies, estimated to cost £1.2 million, and 360 participation by others would of course reduce the Government contribution.
The Earl of HALSBURYMy Lords, will the Government be ever mindful that the finest way of securing unemployment among heavy engineering firms in perpetuity is to postpone making a beginning on the installation of full-scale plants until everybody else is doing it and has the experience, so that we then have to buy abroad?
The Earl of GOWRIEMy Lords, I appreciate the noble Earl's point, and note the support it has in the House. I would say, however, that all energy issues are about mixed systemswe are running a mixed economy where energy is concerned, and that means obviously that some priorities will have to be taken before others.
§ Baroness WOOTTON of ABINGERMy Lords, I was about to ask the question asked by the noble Lord, Lord Campbell of Croy, but I wanted to put in addition the question whether it is not a fact that this process is utilised on quite a considerable scale in South Africa?
The Earl of GOWRIEMy Lords, that is the case. My advice is that the particular technology utilised in South Africa, called the Sasol technology of gasification synthesis, is expected to have a substantial cost and efficiency disadvantage compared with the direct liquefaction processes we are now developing in this country.
§ Lord BLYTONMy Lords, is the Minister aware that as far back as 1919 Sankey's inquiry recommended that the greatest by-product of coal would be oil and that we should spend money on research? Research has taken place only in the last 25 years. Does he not think that if we spent more money on research to produce oil from coal economically it would do this country a world of good?
The Earl of GOWRIEMy Lords, as I hope my answers have made clear, we are spending a considerable amount of money on energy research. In this regard we are spending nearly £;1 million this year.
§ Lord RITCHIE-CALDERMy Lords, will the noble Earl agree that this process 361 which we are now discussing has been discussed to my certain knowledge for 50 years—more than that—and the fact is that we are talking about something which is real. Is the noble Earl aware—he is if he has been listening to me over the past 12 years—that the German military machine ran for 12 months on oil from coal?
The Earl of GOWRIEMy Lords, I am indeed aware of that, and I do not want any of my answers to give an air of scepticism about this processI am not sceptical about this. The fact is that things have to be cost effective, and at the moment this would be very expensive to push further. As the price of oil goes up, however, so market forces will enable this process to become more cost effective.
§ Lord DAVIES of LEEKMy Lords, with reference to the noble Earl's important Question, and having listened to some constructive answers from the noble Earl opposite, as noted in the Domestic Coal Consumers Annual Report, why in the name of Heaven above was the Energy Commission disbanded in the euphoria of winning the election? That report says that it could have helped in research and other work. For Heaven's sake reestablish the Energy Commission!