§ 9.42 p.m.
§ Lord Ezra rose to ask Her Majesty's Government whether they are satisfied with the level of energy research and with the balance between the various programmes.
§ The noble Lord said: My Lords, I have posed the question of energy research because I found, somewhat to my surprise, that the very excellent report prepared by the Energy Committee in another place, dated July 1984, had not been specifically debated. I feel that in the present state of affairs in the energy market, which has re-emphasised the changing nature of the energy scene, it is timely to ask one or two questions about the state of energy research.
§ We are, of course, as a country benefiting from the resources we have in the coal industry, the North Sea, our nuclear expertise, and in other ways. We are a surplus producer, particularly of oil, and that has benefited us to the tune of £8 billion in overseas earnings. The counterpart to that felicitous situation is that in periods of plenty one tends to forget about the future and not prepare for it. We must be ever vigilant. Situations change.
§ The Secretary of State for Energy recently emphasised that the Government's energy strategy was to keep options open. One can keep options open in a valid way or in an invalid way. The only valid way of keeping options open is to make sure that the research and development is done so that when the time comes to exercise the option there is something that can be exercised. There is not much point in trying to exercise options which remain ideas on paper. That is why this whole question of research and development is of such importance. It leads to the two simple questions that I pose tonight: namely, is the general level of our R & D in energy sufficient; and is there a proper balance between the different programmes?
§ In considering the first question I think we must start by deciding what is the level of our energy research. That was referred to in a recent debate in another place by a colleague of the noble Lord, Lord Gray, as being of the order of £1 billion, which represents some 3 per cent. of the overall value of the energy consumed in this country—estimated as being £35 billion, which in turn I suppose, is roughly 10 per cent. of our GNP. So that sets out the order of magnitude.
§ The question that we have to ask is: is this £1 billion enough? It is very difficult to answer that question unless one has some comparative figures, and the only comparative figures that one can use relate to what other countries do. So I have looked at other major industrialised countries—Germany, the USA, France and Japan. Their research proportion in relation to energy consumption, which I think is a fair way to look at it because of climatic conditions and so on, is in all cases higher than ours.
§ So one is bound to ask the question: are we doing enough? On the whole, I think we should err in doing rather more than rather less, not only because of the uncertainties of the future but because we have an 770 innate expertise in this country. Also, many of these projects can lead to very successful export operations. So we are not merely having to concern ourselves with what we might be doing here, but we could be researching things in the energy field which could usefully be developed abroad to our advantage. So I suspect that on the whole we probably are doing rather less than more overall.
§ But what is a much more interesting question is the balance within the total. Here, I think we need to refer back to the Select Committee's report of 1984, which drew attention to the gross imbalance between expenditure on the supply side R & D and demand side R & D. It indicated that according to the 1984–1985 Estimates the Government intended to spend only some 4 per cent. of the total amount which was spent on energy research on the demand side; that is, on stimulating efficiency in use. That was one point which was made, and I think it is fair that we should ask the noble Lord the Minister to comment on that; to let us know whether and to what extent that imbalance has been corrected.
§ When the programme is examined in more detail we see that continuing throughout recent years there has been a massive concentration of research on nuclear. It may be argued that there has been quite a spin-off from this in the success of our earlier nuclear plants and in the by-products to which that has given rise. Nonetheless, taking into account the R & D expenditure of government, which is about half the total—namely, £500 million—it does look as if nuclear accounts for rather more than half of that. On the face of it this seems to be out of proportion with the remainder. I think it is fair to address another question to the noble Lord and ask what are the plans for the future. Will this situation continue or are we progressively going to redress the balance in that connection?
§ In view of my past association with the coal industry I was naturally very interested to note that at long last the coal liquefaction project at Point of Ayr has been agreed. I think that this is something which we started talking about 10 to 15 years ago. However, what rather disturbed me about the project which is now agreed is its very small scale: two-and-a-half tonnes a day. Recalling my previous connection with that project, it did not seem to me that this would really get us much further beyond the laboratory stage already reached. But maybe the noble Lord will be able to reassure me on that point. Looking ahead and knowing the enormous reserves of coal in this country this raises the question whether we should not be doing rather more in taking coal forward into other conversion projects.
§ Next, I should like to raise the question of how much we are spending on what could be called the newer areas of energy research. They are three: renewables, the environment and efficiency. In all three we are probably not doing as much as we should be. Let us take renewables. There was an important debate in another place on that subject on 25th October which was most instructive. There has evidently been a major change of emphasis by the Government in that they have moved away from wave energy, which was previously considered a desirable 771 subject for investigation, and from active solar energy, to what is known as passive solar energy and to the use of waste materials. Those two appear to be the renewable resources on which the Government are particularly concentrating at the moment, although a certain amount of work is being done on geothermal and wind power.
§ In the debate in another place the question of the virtual cessation of work on wave energy was raised in view of what is reported as having been the fairly successful experiments in Norway. The Norwegians seem to be getting somewhere at the very time when we seem to be giving up. Is that correct, or not? I think that we ought to have an answer to that. Overall we are spending a relatively limited amount on renewables even now, although it has gone up a bit. Ought we not to be spreading the net a bit wider and going into this more thoroughly?
§ On the environmental side of research, there is a major job to be done to try, once and for all, to settle the question of acid rain. I do not think that we can go on ad infinitum with that problem hanging over our heads and making life difficult abroad, and indeed increasingly at home. It may be something that cannot easily be resolved, but nevertheless we have to take up a position sooner or later. After all, we are a country that led the way in getting visible pollutants out of the atmosphere. The clean air legislation of the early 1950s was remarkable. I think that we must be equally in advance of the pack in dealing with invisible pollutants, once we have clearly identified the problem.
§ Energy efficiency is the third of the newer areas. Here I think that everyone would applaud the vigour with which the Secretary of State for Energy is pursuing his energy efficiency campaign, getting up at the earliest hours in the morning, persuading British management to do the same and putting out impressive advertisements in the newspapers. I think that by now everybody is aware that this is Energy Efficiency Year.
§ However, the question has been raised in another report of the Select Committee on Energy in another place as to whether this might be a similar experience to those which we have had so often in the past on energy efficiency; namely, to have a real go one year and then forget it in the succeeding period. We need to be sure that what we are initiating this year will be of continuing importance. One way to secure that is to enlarge the number of research and development projects. I know that they are not easy to identify, but I believe that more effort needs to be made if the laudable enterprise of trying to stimulate energy efficiency is to have a lasting impact.
§ A report in the Financial Times the other day which was devoted to this subject indicated that the number of fuel efficiency projects was declining. I do not know whether that is correct, but that information is alleged to have been contained in the Fuel Efficiency Office report of November 1985. If that is so, it is a sad commentary.
§ I should like to conclude my brief remarks by stating, first, that we need to be assured, so far as one 772 can be in these matters, that the absolute level of our research is right. I believe that it is probably a little on the low side by comparison with other countries. Secondly, and more important, there is the question of the balance between the programmes. I have raised specific points on that, and no doubt other noble Lords will do the same. Finally, I should like to make this proposal. In the Select Committee's report of 1984, to which I have referred, it was recommended that there should be regular and comprehensive reviews of priorities and expenditures in energy R and D. What was not made clear is how frequent these should be.
§ I believe that we would gain if there was an annual review of energy R and D. A lot of information is put out about this. In preparing for this short debate, I read the reports of the OECD into which there is a United Kingdom input, various reports of the EEC, Select Committee reports and so on. It is possible, if you have the time, the energy and the capacity, to put all this together. But not everyone has this on this subject.
§ It would be of great assistance to this House and to the other place if the Government could prepare, on this vital topic, a report annually on the progress achieved during the past year and the emphasis that is to be put on energy R and D in the ensuing year. I assume that this is an exercise that they have to do themselves. So why cannot we all share in it? Then we can, perhaps more frequently, debate this question in the House.
§ 9.57 p.m.
The Earl of Halsbury
My Lords, I am grateful to the noble Lord, Lord Ezra, for giving me the opportunity to express what is on my mind. For, however satisfied the Government may be in an affirmative answer to the noble Lord's Question, I am not satisfied. I am not satisfied that we are doing well in distributing R and D expenditure. The simple answer is that we have not got the mechanism for doing it. In order to substantiate this statement, I have taken the trouble, with nuclear power as the subject, to draw up a list from 1945 to 1985 of all the top level personnel responsible for decision making—all the Prime Ministers, all the Ministers and their Permanent Secretaries in all the Ministries that have been responsible at one time or another for nuclear power on the one hand, and fuel and power on the other; all the chief executives of all the quangos and all the nationalised industries involved in it. If one looks at this large chart—a sort of super chess board—with the years going downwards and the Ministries going across, there were only four years in which there was not a hiccup due to someone at top level being replaced by someone else. That is no kind of a system at all for getting things right.
Let us see how it responded to the problem set by nuclear power. In 1955, the first nuclear power programme was set down. In 1956 came Suez. And in 1957 came panic when we multiplied that programme by three. In 1960, three years later, we were recovering from panic and divided it by two. Four years later, there was a change of government coinciding with what was called the Oyster Creek breakthrough by Westinghouse, who announced that they had the final 773 solution to a well engineered nuclear-powered power station. They actually quoted a price list which was pure fantasy. Others, such as Babcock and Willcox and General Electric, got on to the bandwagon and produced their own price lists. One year after the change of government, we assigned the contract for the first of the AGRs, Dungeness B, to the least competent of the five consortia then in operation, it being in very bad trouble indeed over Trawsfynydd.
In 1973, there was another panic when OPEC put up the oil price. We were panicked into believing that we wanted 32 reactors by the end of the century. Since we were manifestly incapable of building them without assistance, we started talking about using the Westinghouse PWR which appeared the only possible practical solution. That built up what I might call the Westinghouse PWR lobby, which continues to exhibit obstinacy although the need for these 32 power stations has completely evaporated.
In 1978 I warned this House that some form of nuclear incident was going to happen because there were too many of these PWR reactors in too many unskilled hands; and in 1979 it happened—Three Mile Island. This is the sort of atmosphere of uncertainty in which this non system has had to operate.
Let me now come to the present and deal with the AGRs. There was no such thing as an AGR. There were three original designs for an AGR. Design No. 1 was a very bad design and led to a shambles in which the fifth consortium engaged ceased to exist, and the Central Electricity Generating Board took it over and tried to make something of it. Design No. 2 is the one installed at Hartlepool and Heysham, and that is still not giving satisfaction. Design No. 3 was the one installed at Hinckley Point and Hunterston B and is performing splendidly, giving up to 106 per cent. load factors from time to time. Design No. 3 Mark II (one might call it)—the fully developed successor to design No. 3—has incorporated all that has been learnt with design No. 3. That could be called design No. 4 if you like. That is the one which is going in at Torness and Heysham II. All ought now to be well. We believe that we have a design which works.
But alas!—the evil genius of this nation has exploited the obstinacy of the PWR lobby. If I talk of that "evil genius" I must describe its features as too many cooks permanently stewing too much brew, a lack of straight line command in many cases, multiplication of committees, dislike of clearcut decisions, and the inability to start something and to carry it through to a successful conclusion, without becoming faint-hearted and starting something else on the road.
Currently Britain has four options: coal, oil, gas and the nuclear option. France has no coal, no oil and no gas. She has only the nuclear option and has exercised it, and built up a very large, highly competitive machine for producing in large numbers the Westinghouse design of PWR. But that design is becoming commercially obsolescent. No-one is ordering them in the United States. They are waiting for the new MOX-based Westinghouse design; and so are the Japanese. MOX stands for mixed oxide reactor and arises by substituting plutonium for uranium 235 in the form of an enriched fuel.
774 The PWR proposed for Sizewell is a revamped version of the commercially obsolescent Westinghouse design revamped to British safety standards. We shall never export it because the basic design is commercially obsolescent. We shall never build another AGR if we build the PWR. The AGR team will disperse beyond any chance of reassembly. What we could export is the perfected AGR in which we manifestly have confidence because we are adopting it ourselves. In fact, when Torness comes on line some time this year, 60 per cent. of the South Scottish Electricity Board's power will be generated by nuclear power stations.
When we must next have a new station will emerge from the Sizewell inquiry. If it is not wanted immediately, it would be criminal folly to build a PWR until Torness has shown its paces, which it will begin to do in the course of this year. It will be completed perhaps in May; and go critical perhaps in October or something like that.
There are many other matters upon which I should like to touch in support of what the noble Lord, Lord Ezra has said, but time is brief. I must resume my seat. Why is time brief?—because of the 18 Back-Bench speeches in the previous debate only eight speakers obeyed the Back-Bench rule on confining their speeches to 10 minutes. Ten of them exceeded that limit, and of those 10 five spoke at greater length than the noble Lord, Lord Seebohm, when he moved the Motion which stood in his name.
§ 10.5 p.m.
§ Viscount Hanworth
My Lords, this debate is very timely at the start of the year, because the Secretary of State for Energy has designated 1986 "Energy Efficiency Year". Almost everyone agrees that more efficient use of energy is very cost-effective and important in conserving our North Sea oil and gas reserves. In fact, it is sometimes referred to as the "fifth fuel". In 1983 the Government set up an Energy Efficient Office which provides advice to industry. I gather that further increased funds are being made available to extend its activities.
The eighth report of the parliamentary energy committee published in October last year makes many useful recommendations in this field. Unfortunately Britain is at present near the bottom of the energy efficiency league and it is estimated that if we could get to the top of the league there would be a saving of around £7 billion in energy costs. Government-owned properties and establishments are important energy users and it is hoped that capital will be made available to effect the necessary improvements in their energy use and show the way to others. I wonder if that will ever happen? It should do so.
For many years I have campaigned for better insulated houses. The Government have improved the mandatory building standards, but much higher insulation is cost-effective and can pay for the initial cost in a very few years. It is no good saying that the marketplace can be left to decide on insulation levels, because the public are only dimly beginning to realise that it is worth paying, say, another £200 for high insulation in a new house. With the exception of roof insulation and, to a lesser extent, cavity wall filling, it is difficult and expensive to improve the insulation of 775 existing houses. Our standards in today's new houses will therefore affect future generations to whom insulation is likely to be more important with the expected rise in energy costs. I should like the Government to commit themselves to a further improvement in insulation standards in, say, three years' time.
There is one very important lacuna in the present requirements, and that concerns floor insulation. Up to one-third of heat loss can occur through the floor. In addition, a room with a simple concrete floor can take a very long time to warm up. It then stays warm when the heat is not required, which is of course in itself very wasteful.
I turn to alternative energy sources. Nothing dramatic has happened in the last few years. I am in favour of research and exploiting, where applicable, alternative sources of energy. But in my view only the Severn Barrage, costing in the order of £8 billion, can make any really significant contribution to our electrical energy generation, and it would then be about 6 per cent. At present, large windmills of three megawatts are proving unreliable. They have a blade diameter of around 90 metres and have to be sited at distances of something like half a mile to prevent interference. Bearing in mind that they will often work at much less than full-rated capacity and sometimes not at all, at least 500 such windmills would be needed to equal the output of one modern 1,000 megawatt power station. For environmental and other reasons, I personally do not foresee that any very large development is likely, although I know that some others disagree with me on that point.
Combined heat and power when used for district heating has been estimated to have an ultimate theoretical potential of providing 22,000 megawatts of heat, with a saving equivalent to 14 million tonnes of coal a year. Without an existing district heating network the development of large combined heat and power schemes present several practical problems. Digging up the streets and persuading enough householders to accept a new form of heating imposes delays in bringing any system into full operation. Nevertheless, I believe that we must embark on at least one medium-sized scheme as soon as possible. If the local authorities which are now interested cannot finance any such scheme the Government should help.
The question arises as to how limited funds for research and development should be allocated for alternative energy projects. I believe that there is often no direct relationship between the importance of a subject and the amount of money which should be allocated. Other nations will be researching on many of the projects in which we may be interested. In some cases it may be sufficient to keep a relatively small team in being ready to expand when others have done the research work. The Japanese owe their success to doing just this.
Sooner or later we are likely to want to produce gas and petrol from coal because of shortages of natural products, but at the moment it would be very uneconomic to do so. At present South Africa is doing a great deal in this direction for political reasons. We shall most certainly learn from their experience, and perhaps we need not be leaders in this field so long as 776 we continue with research and development of small-scale prototypes. Winning coal or its derivatives without mining is a very attractive idea, but in spite of considerable research and trials it still seems impractical on a commercial and large-scale basis. However, bearing in mind our coal reserves, we must carry on very actively research into trying to burn coal without taking the sulphur out and not producing too many nitrous oxide products. This may be important for the future in giving us other options apart from nuclear ones.
I am sure we must continue with nuclear power for the foreseeable future. On the evidence, I personally—I disagree with the noble Earl, Lord Halsbury, on this—favour the PWR reactor. I have said this on the evidence as I know it today. I do not think a really sensible conclusion is possible until we have had the benefit of reading the report. The disposal of nuclear waste, provided we take all sensible precautions, is in my view not a major problem. The frightening development in the nuclear field is the extension of nuclear capability for smaller and less stable nations. Uranium can be obtained fairly easily. The plant for enrichment by gaseous diffusion was a major engineering feat; the use of centrifuges less so, but not if now it is potentially much easier using lasers. This makes proliferation of nuclear capability much easier and perhaps undetectable.
§ 10.14 p.m.
§ Lord Stoddart of Swindon
My Lords, I, too, welcome this debate and should like to thank the noble Lord, Lord Ezra, for raising this important issue at this time. I have to say to him that I agree entirely with what he said. I shall say some of the same things in my own way during the course of my remarks.
Perhaps I may also say that I welcome the remarks of the noble Earl, Lord Halsbury. When he speaks we always know there is going to be some original thought, and I sincerely hope that the Government will take particular note of what he said about the mechanism of handling our research and development programme. I think that is a very important point which ought to be taken on board.
I could not help warming to the noble Earl when he mentioned the AGR and, indeed, confirmed my own view of the AGR, that there is nothing inherently wrong in the technology. Indeed, there never has been anything inherently wrong in the technology: it was the project's management and the bad labour relations which made those earlier schemes seem not viable and costly. I maintain the view that the AGR is a good technology which should be applied in this country, and that if it is applied properly, as the noble Earl said, it has an exportable potential.
The noble Lord, Lord Ezra, has asked two questions: whether the Government are satisfied, first, with the level of energy research, and, secondly, with the balance between the various programmes. No doubt the noble Lord, Lord Gray, will answer "Yes" to both questions and will try to justify his answer. However, in my own view and that of the Labour Party the Government may be able to sound convincing about the level of research, although I doubt it, but they really cannot defend their record as to the balance between the various programmes.
777 I say this because it is patently obvious that the Government simply do not now have, nor have they had since 1979, any cogent energy policy which would achieve the vital objectives of securing security of supply, of conserving the finite indigenous energy resources of coal, oil and gas, and of developing to the full the potential of renewable energy resources. Indeed, until recently their whole approach to conservation has been through the price mechanism, and they have not hesitated to interfere in the most clumsy way in the pricing of gas and electricity in particular, causing, by their actions, difficulties for industrial consumers and hardship for many consumers. Such a policy never had any rational basis and could make little real contribution to a positive long-term energy policy for this country, and its contribution even to conservation is questionable.
It is quite true that of late—and this has been mentioned by the noble Lord, Lord Ezra, and the noble Viscount, Lord Hanworth—the Government have embarked upon a concerted publicity campaign aimed at conservation. Of course, this is to be welcomed, and we wish from this side that it has every success. However, I am bound to say, and indeed I agree with the noble Lord, Lord Ezra, that this one-off operation will be no good unless it is pursued. I am also bound to say that the Government somewhat undermined their "Monergy" programme in advance by their withdrawal of house insulation grants and by failing to recognise that a theoretical pay-back on investment and energy saving will not be a sufficient incentive to consumers, particularly domestic consumers, who generally lack the capital resources to instal energy-saving devices.
However, the Government's "Monergy" programme is an isolated and inadequate response to the real need to preserve our indigenous energy resources for use over the longest period of time. The profligate depletion of our North Sea oil reserves has, apart from reducing the period of self-sufficiency, had several baleful effects. Our manufacturing base has been eroded, with consequent ill effects on employment. Over-production has had an adverse effect on oil prices, and even over the past days and weeks we have seen what a bad effect that has had on our own economy.
Coal, of which we have plentiful supplies, seems to be seen only in the context of burning to provide electricity. Yet, when the oil runs out, we shall need that coal for other purposes, for conversion to oil and to provide the by-products now gained from oil refining. But all that the Government are doing in the matter of producing oil from coal is, as the noble Lord, Lord Ezra, remarked, to support a small pilot plant involving about 2½ tons of coal per day. Similarly with regard to combined heat and power, the Government have shown no urgency about proceeding with the lead city schemes recommended by W. S. Atkins and Partners, although such schemes would save fuel, provide many jobs and, in financial terms, show a proper and real return on capital employed. But, of course, the Government will point to the nuclear programme and say that that is the real way to conserve fossil fuels, ignoring the fact that there are real limitations upon the number of nuclear power stations that can be built in this country and ignoring 778 the environmental and waste disposal problems, which, frankly, I have to say to the noble Viscount, Lord Hanworth, have not yet been solved and are not likely to be solved in the very near future.
These problems have to be overcome—not to mention the finite nature of the uranium resource. It is this nuclear tunnel vision which leads the Government to spend directly £197 million a year on nuclear research and a contemptible, miserly £14 million a year on renewable energy sources research. In Japan they spend £127 million per annum on renewables; and in the Federal German Republic £55 million a year is spent on research into renewable energy. Clearly, this country's effort is niggardly compared with those of other industrial countries.
The Government, of course, defend their niggardly attitude by saying that they only want to back winners. The language of the racecourse is hardly appropriate to energy research but, in any event, any professional punter will tell the noble Lord that the only way to pick winners and make money as a punter is to embark upon a great deal of research and analysis. That is what they do if they are going to win money. But one wonders whether the Government know a winner when they see one.
I have already mentioned CHP as a certain winner, backed by many other nations, but, instead of putting their shirt on it, the Government are still pussyfooting around with feasibility studies. Then there is tidal energy. The Severn Barrage has been talked about and investigated for years. But it is as far away from becoming a reality as it ever was. Such is the nature of this Government that they can decide on a scheme for building a Channel tunnel, a scheme of, in my view, doubtful validity and having enormous environmental consequences, in a matter of months. But even after years of consideration we are no nearer to building a Severn Barrage which would bring massive economic benefits and huge savings in fossil fuel. Perhaps the noble Lord, Lord Gray, would bring the House up to date with regard to the Severn Barrage scheme and say whether the Government favour at least one of those projects at present under discussion.
There is one horse in the renewables stable that the Government virtually owned, trained and developed; but they gave it away. I am referring to wave power. There is a potential 120,000 megawatts of wave power around Britain's coasts, a good part of which could be harnessed to provide energy for an infinite period of time at no fuel cost. Estimates of the usuable potential vary but, even on the Government's own pessimistic estimates of between 6,000 megawatts and 13,000 megawatts, the contribution of wave power to energy supply could be significant. Indeed, on the Government's own estimates wave power could save the capital cost of building between six and thirteen Sizewells at £1,500 million each—if we are lucky.
Great strides were made in this country in the development of devices to harness the energy from waves. Indeed, from reports from a number of sources it appears that electricity from wave energy could be produced at a cost well below 5 pence per unit. Indeed, according to an article by Anthony Tucker, unpublished figures from Harwell suggest that, given equal support, wave energy could produce electricity more cheaply than either coal or nuclear power. 779 Perhaps the noble Lord will confirm that. Yet, at the very moment when success was at hand, the Government decided to withdraw their support from wave energy projects. But the Norwegians persisted and, using largely British-developed know-how, have built a wave energy machine which is expected to produce electricity at 3.4 pence per kilowatt-hour. The noble Lord, Lord Ezra, is quite correct. There is an export potential here but we apparently export our know-how, our expertise, free of charge for other countries to use. I think that is a disastrous policy and I hope the Government will give an account of themselves tonight.
What sort of skulduggery went on to convince the Government to withdraw support from wave energy just at the moment when success was to hand? Did the nuclear industry, sensing a threat to its dominance, move in to kill the project by ensuring that costs were deliberately inflated and performance underrated to fool poor, innocent, unscientific Ministers into abandoning support for wave energy? Or were Ministers themselves culpable because they were desperate to save money and did they decide that wave energy, with its low public profile, was the easiest target for their cost-cutting mania? Perhaps we shall never know the truth; but my advice to the noble Lord and the Department of Energy is to look closely at wave power again, since I believe that it is probably the renewable with the best long-term potential.
Of course, we welcome the steps which the Government are taking with wind power and indeed we welcome the news that the CEGB are to build another installation at Richborough. Can the noble Lord tell me what is happening about vertical-axis wind machines? They, too, have a potential, particularly around our coasts, perhaps sited in the waters of the East Coast. Perhaps the noble Lord will give us the Government's view on that.
The Government are not doing nearly enough to develop renewable energy. Indeed, their view is that renewable sources are peripheral and, for that reason, their renewables programme remains minute, lethargic, lacking in boldness or imagination and completely overshadowed by the massive funding of conventional energy sources and nuclear power. The electricity supply industry and the nuclear industry, aided and abetted by the Government, have sought to persuade the public that the absence of nuclear power means a return to the Stone Age. Nothing could be further from the truth, since a good, well-balanced, properly and adequately funded and staffed renewables research and development programme would assist in providing the nation's energy needs at lower cost and in a safer manner and at the same time would help to preserve the precious stock of fossil fuel.
In conclusion, I would say that I support very strongly the suggestion made by the noble Lord, Lord Ezra, for regular and comprehensive reviews of energy R & D. I think those reports will be of value only if we do have them annually so that we can discuss them and keep the Government up to the programme, and indeed advise them how they should proceed.
§ 10.30 p.m.
§ Lord Gray of Contin
My Lords, I too should first like to join others of your Lordships who have 780 participated in this debate in thanking the noble Lord, Lord Ezra, for giving us this opportunity to debate research and development, and I shall in the course of my remarks try to deal with at least some of the points which he raised.
I should also like to thank the noble Earl, Lord Halsbury, for again giving us the benefit of his vast experience in this area. My goodness! if only other Members of your Lordships' House would follow his example of presenting in such a succinct form the knowledge which we all know he possesses on this subject. I have every sympathy with him in the length of speeches which were predominant in the last debate. Indeed, that debate was no exception, so frequently do we endure these very long speeches in this House. It is a great shame. I should also like to thank the noble Viscount. Lord Hanworth, for his contribution and, again, I shall try to answer some of his points.
I shall not be led down the path of political knock-about, which the noble Lord, Lord Stoddart of Swindon, tried to entice me into doing this evening. Indeed, I felt that his speech, although it contained a lot of very interesting and useful statistical information, was not really one of his best. He probably found the style of it suitable in another place, but I think it was rather out of place in the House of Lords. Nevertheless, I thank him—
§ Lord Stoddart of Swindon
My Lords, I can assure the noble Lord that it was not a question of political knock-about. The financing of R & D programmes is a political matter and I approached it in that manner. The reason the research and development programme is not satisfactory, so far as I am concerned and so far as the Labour Party is concerned—and I speak here for the Labour Party—is that the Government are under-financing the programme. I am sorry that the noble Lord should feel that it is political knock-about. He should not be so sensitive. Perhaps he is smarting from last night and his bout with—
§ Lord Gray of Contin
My Lords, I have given way to the noble Lord and I see that I should not have given way to him at all. He is the one who is sensitive. If one cannot make criticism of his contribution, it is a funny old House. But I shall not follow that path and I shall perhaps refer to one or two of his points in the course of my remarks.
I take the view that the Government have a very good record in research and development, and this debate provides an opportunity to describe the programme and how the Government see it moving in the future. There is one possible implication only in the noble Lord's Question to me which the Government would reject: namely, that of complacency, which is inherent in the verb "satisfied". I can assure him that there is no question of complacency, so far as the Government are concerned, and that we are constantly looking to ensure that we are getting value for money in our energy research and that that research is aimed at worthwhile objectives.
The programme is not static, as I hope to show later in this speech. The Department of Energy has estimated that total expenditure on energy research and development in the United Kingdom is about £1,000 million of which, as the noble Lord, Lord Ezra, 781 remarked, about £500 million is financed by the public sector: namely, Government departments, nationalised industries, research councils, etc.
But now let me address myself to the size of the public sector programme on energy research and development. This programme consists principally of expenditure by the Department of Energy, the United Kingdom Atomic Energy Authority and the energy nationalised industries—the British Gas Corporation, the National Coal Board and the electricity supply industry. We should not forget that other Government departments have programmes in this field. For example, the Department of the Environment's R & D programme has an energy content both in its work on energy efficiency, radioactive waste management and acid rain, as well as in other areas. In addition, the Research Council funds useful work—often basic research—in the universities and polytechnics and in its own institutes which contributes towards longer term developments in energy production, distribution and use.
I shall concentrate here on the programme of the Department of Energy and on the UKAEA as it is set out in the 1985 Annual Review of Government-funded R & D published in December 1985 (copies of which are in the Library of the House). The review shows expenditure by the Department of Energy to be £32.1 million in 1982–83 and an estimated £40 million in 1987–88, but remaining stable in real terms over this period. At the same time Government-funded spend by the UKAEA is expected to fall from some £212.4 million in 1982–83 to some £177 million in 1987–88. As those noble Lords who have participated in recent debates on the Trading Fund Bill of the UKAEA will be aware, the basis on which the UKAEA will be funded in the future will change (subject to the passing of the legislation) on 1st April 1986 from a grant in aid to a trading fund. However, the general downward trend of the Government's expenditure on the UKAEA included in the figures I have quoted above show firstly the effects of the review of fast reactor policy in 1982, including the moves towards collaboration with European countries, and a general shift of responsibility for expenditure to those who will ultimately benefit from the R & D; for example, the generating boards.
Taken together, expenditure by the department and the UKAEA represented 5.4 per cent. of Government expenditure in 1984–85, and this is the third largest civil research and development programme after the Department of Education and Science expenditure on university research and the DTI. This is a measure of the importance that the Government attach to energy research and development.
The noble Lord, Lord Ezra, made a comparison with what other countries are doing. The International Energy Agency has estimated that of its 21 member countries the United Kingdom comes sixth after Italy, Germany, Japan, Canada and Sweden in the Government's expenditure on energy research and development per unit of gross domestic product. Again, the IEA estimates that growth in government-funded spend on energy R & D in the United Kingdom was 2.4 per cent. between 1977 and 1983 against a total growth for IEA countries of only 0.5 per cent. So by international standards the United Kingdom would 782 appear to have a very respectable record of which we can be justly proud.
Before I turn to the question of balance which the noble Lord raised with me, I should like to stress that one should not expect to see comparable amounts of expenditure on every element of the energy research and development programme. There are obvious reasons for this. Some programmes may be at a relatively early stage involving only modest expenditure, while others are at the more expensive stage of large-scale demonstration. The noble Lords, Lord Ezra and Lord Stoddart of Swindon, made reference to the wind programme. Taking the wind programme as an example of this, the Department of Energy spend has grown from £0.3 million in 1978–79 to forecast expenditure of about £6 million in 1985–86, most of the current expenditure being on the construction of wind turbines on the Orkneys and at Carmarthen Bay.
Secondly, one has to look at the expected contribution that a technology is expected to make to the United Kingdom's energy economy. One would not expect to see the Government spend as much, say, on geothermal aquifers, which is likely to have very limited application to the United Kingdom, as they might on nuclear, which already supplies about 18½ per cent. of electricity generated in the United Kingdom.
Thirdly, we should not examine the Department of Energy's and the UKAEA's programmes in isolation. The department seeks to complement and not to duplicate the R & D activities of other energy industries—both in the private and in the public sector. The three nationalised energy industries all submit their annual R & D programmes to the Secretary of State, who asks his Advisory Council on R & D for Fuel and Power (ACORD) for their views on the balance of their programmes. As the Government's annual review of R & D shows, the British Gas Corporation spent some £68 million on R & D in 1984–85, the electricity supply industry some £123 million, and the NCB some £43 million. We would not expect to see the Department of Energy funding similar programmes to duplicate this work, and so the department's programmes in those areas were relatively modest. In the case of longer-term research in the nuclear field, Government funding has regard to its potential contribution to meeting the country's long-term energy needs.
Similarly, in looking for "balance" in the oil sector, the department takes into account the vast resources spent on oil and gas exploration and production and related industries. The department does not attempt to second guess those commercial companies who are active in this field, but aims to concentrate on those areas necessary to ensure that the maximum oil and gas is recovered in the most cost-effective way to the benefit of the United Kingdom economy as a whole.
In addition, the department has a responsibility for the natural environment in which offshore work is undertaken and for the safety of the methods used in offshore exploration and production. It also needs to have an intimate knowledge of the geology offshore and onshore of the United Kingdom, and to this end it commissions work from the BGS. Finally, the Government are supporting the R & D work of 783 offshore supply companies in developing the technologies necessary to enable them to operate competitively at home and world-wide.
Together, those examples show that the department seeks to take account of activities elsewhere in the United Kingdom and to ensure that a programme is undertaken that seeks, without duplication, to meet the medium and longer-term energy requirements of the United Kingdom.
The noble Lord, Lord Ezra, suggested at the beginning of his speech that the Government should consider an industry spend in total, and not the spend of Government alone. That is very important because there is a danger that, when talking about research and development, we may tend to look at Government spending in isolation. That would be a great mistake. I have tried to illustrate with some of the figures I have given that we should really consider the broad picture and total expenditure on R & D for the whole country—and not just Government expenditure by itself.
I believe also that it is better to bring research and development spend per unit of consumption into line with other countries by reducing energy consumption rather than by increasing research and development spend. I am grateful to the noble Lord, Lord Stoddart of Swindon, for his encouraging remarks—and I did note some encouraging remarks in his speech—about our efforts so far as that aspect is concerned.
The noble Lord, Lord Ezra, also referred to the Point of Ayr. The same point was raised by other noble Lords. The Government have made it clear that they will contribute 10 per cent. of the cost of a two and a half tonne liquification plant at Point of Ayr, subject to participation by the private sector. This has been made clear for some time. This size of plant was seen to be the optimum size to ensure that the process could be fully defined and demonstrated to the satisfaction of potential users.
The noble Lord also asked about acid rain. I can tell him that both the CEGB and the National Coal Board have substantially increased expenditure in relevant research and development over the past year or two. I accept the importance of understanding the strange phenomenon which is involved here, to the answer to which we have not yet been led. I am sure that in due course we will find an answer to it, but the research is going on at an increased level.
The noble Earl, Lord Halsbury, made a very interesting comment on nuclear power and referred to AGRs and PWRs, as did the noble Lords, Lord Stoddart and Lord Ezra. It was interesting to note that even in a debate in which the participants are few in number we found that we were not all of a mind so far as the AGR is concerned. I thought it was very useful that the noble Viscount, Lord Hanworth, should have expressed his view in favour of the PWR because I think that is reflected as a true picture of the general impression among those who are interested in the future of nuclear reactors at present. There is a very strong body of opinion—I do not deny it for one moment—which favours the AGR and I must admit that, having recently visited Torness, it is a very impressive operation indeed; of that there is no doubt. 784 It is the culmination of all the years of effort which have gone into the AGR.
But it would be foolish to suggest that that is the only option. The PWR is being considered at present in the Sizewell inquiry and the success which it has already achieved cannot be denied. It has, of course, been used in a great many parts of the world. We shall have to wait for perhaps some time before we hear the verdict of the Sizewell inquiry, which has considered the evidence given on behalf of AGRs as well. We shall see what the report has to say about that. As regards nuclear expenditure, the proportion of Government expenditure on energy R & D devoted to nuclear power is tending to decline, as I indicated in the figures I have given.
The question of wave power was raised by the noble Lord, Lord Ezra, and also by the noble Lord, Lord Stoddart. Of course, the noble Lord would not expect me to accept his criticism of the Government in this respect. Let me just say, however, that the Department of Energy's wave energy programme was ended because a detailed assessment showed that it would be uneconomic in large scale use for United Kingdom electricity supply. The programme established the feasibility of extracting energy from waves and assessed the size of the resource. Unfortunately the detailed cost analysis concluded that there was only a low probability of any wave design achieving a cost generation of less than 8p per kilowatt hour. A report on the programme has been published and copies are in the Library of the House. Norwegian experiments on wave energy are on a very small scale and benefit from favourable local physical features. This is unlikely to yield energy on a sufficient scale to be significant in the United Kingdom, I am afraid.
The noble Viscount, Lord Hanworth, raised the question of combined heat and power district heating schemes, etc., as did the noble Lord, Lord Stoddart. I can tell them that the Government have pursued a programme of studies of CHP district heating since 1975, culminating in the publication of the Atkins Report on feasibility studies for nine major cities. The Government then encouraged the formation of consortia consisting of private sector industries, fuel industries and local authorities, to prepare prospectuses for schemes. Three consortia are receiving £0.25 million each in government grant toward the cost of examining schemes for Belfast, Edinburgh and Leicester. Sheffield is also pursuing studies with aid from the European Community; and Newcastle and London are also maintaining their interest. So things are moving in that direction, even if they still have some way to go.
The noble Lord also mentioned wind power, and I think I have dealt with that point already. The question of tidal energy was raised by both the noble Viscount and the noble Lord, Lord Stoddart. The United Kingdom has access to a substantial tidal resource, and a number of sites have potential for tidal power. While the technology is not a particular problem the economics still remain uncertain and are very much site specific. The Severn estuary, about which the noble Lord asked me, is one of the best potential sites in the world, owing to its exceptionally high tidal range, and we are providing support for a study of a private sector tidal energy barrier scheme in 785 the estuary. We have also supported a preliminary evaluation of a smaller but nonetheless potentially attractive scheme for a Mersey barrage and we are carrying out further work on smaller-scale tidal schemes.
In conclusion, I think that I should take the point which the noble Lord, Lord Ezra, made about the Government producing an annual review regarding an omnibus of research and development expenditure. The noble Lord, Lord Ezra, was very fair and said that there were a number of areas from which this information could be obtained, but I do not know if he has actually seen the annual review of government-funded research and development which does, I think, collect all the information very usefully indeed. I take the point that he has made.
§ Lord Gray of Contin
My Lords, I am glad that the noble Lord has seen it, at least, because I think it is a useful publication. I have some doubts as to whether he has made a case to justify an annual publication of the kind he has in mind, in view of all the information which is already available, but I undertake to pass on to my right honourable friend the Secretary of State for Energy the suggestion which the noble Lord has made, and no doubt energy Ministers will look at it and give it consideration.
Finally, may I again thank the noble Lord, Lord Ezra, for giving us this opportunity to have a short but very interesting debate, and I should also like to thank 786 those of your Lordships who waited until this late hour in order to take part in it.
§ House adjourned at five minutes before eleven o'clock.