Energy Strategy

HL Deb 10 June 1992 vol 537 cc1300-27

Lord Tordoff

My Lords, it is with some regret that I have to inform the House that my noble friend Lord Hanworth appears to have become indisposed or to have met with an accident. Therefore it is my intention merely to move, in a rather formal way, the Motion on the Order Paper. It seems to me —and I have the agreement of the usual channels that this shall be done —that we should proceed with this important debate, if for no better reason than that the noble Lord, Lord HolmPatrick, will grace us with his maiden speech. It would be very unfortunate if he were deprived of that opportunity.

I am sure that my noble friend had many things to say in opening the debate which I cannot emulate. The long-term strategy for the generation and use of energy and the inter-relationship between nuclear and renewable fuels is an important matter. I only wish that we were in a position to hear my noble friend on those problems. Nevertheless, we have the opportunity of hearing other noble Lords give their views on the subject. Therefore, I beg to move the Motion for Papers standing in his name on the Order Paper.

5.30 p.m.

Lord HolmPatrick

My Lords, I am pleased to speak to the House for the first time and to do so in this important debate. In order to stay within the traditional guidelines of a maiden speech I shall say a few words on a particular aspect of this important subject, while sticking to the efforts being made in the British Isles.

There are in place in the British Isles a number of power stations which burn either non-renewable fossil fuels or are nuclear powered. I must say that without them we should not have much electricity with which to supply our domestic and industrial needs. I should not hesitate to say that the whole House is concerned about the polluting effect on the atmosphere of the burning of fossil fuels. I have no doubt that your Lordships are also aware of the increasing problems of the disposal of certain waste materials from power stations.

With the increasing demand for electricity new power stations will be built and some of the older stations will have to be replaced in the near future. But do they all have to be replaced with conventional power stations? I believe that there are alternative sources of power which should be given serious consideration. I am talking about renewable energy from the earth's natural resources. Hydro-electricity has been used for some time. It is clean and renewable but it has its problems. Any major projects tend to have a large and somewhat distressing environmental impact. It is now a little difficult to find new sites. Only recently has the technology for smaller hydro-electric generators been good enough and now a landowner or small community wishing to install a small turbine can take advantage of the considerable price reduction in the installation of such a machine. They can now also rely on the co-operation of their local electricity board.

Energy can be obtained from various wastes. That which strikes me as being the most significant is the landfill site. Properly-buried waste will gradually break down and the organic matter contained will produce methane gas which can be used for all kinds of purposes, including the generating of electricity. My local site has recently installed a small plant to collect the gas which is then taken away in a tanker. That is a small reward, if you like, from what is an ever-increasing headache; namely, the disposal of domestic rubbish. That source is renewable but it is not quite clean.

Solar power is not a strong contender and must be further researched and developed before we have much use for it in this country. I am sure that many noble Lords have already made arrangements to receive during the Recess a guaranteed supply of that renewable source of energy while in other parts of this planet.

Perhaps I may at this stage remind the House of the non-fossil fuel obligation which came about in 1990. There is an 11 per cent. levy on all electricity produced by fossil-fuel burning power stations. The money accumulates and is held by the non-fossil fuel purchasing agency. The power companies can draw from that fund enabling them to buy in at a premium price any electricity produced from non-fossil fuel sources.

One such renewable source of energy which has been able to take advantage of that important act is the wind farm. I should like to congratulate Wind Electric, National Power and South-Western Electricity Board for their combined effort in setting up the first commercial wind farm at Delabole in Cornwall. Wind Electric was formed in 1989 and was the result of 10 years' research and hard work by a determined individual. Cornwall County Council granted planning permission in August 1991. A company in Denmark was approached to supply the 10 machines required. At the beginning of December everything needed to start the installation was on site. By 15th December Delabole Farm was producing its first electricity, which was fed into the grid system by means of a small substation.

Not only must a great deal of money have been saved—the on-site operation lasted only 15 days—but the environmental disturbance and the disruption to local traffic was kept to a minimum. Your Lordships might be interested to know that the 10 wind machines at Delabole represent 12 million kilowatt hours per year, which in real terms represents one year's consumption by 3,000 average households. Wind farming has attracted a great deal of interest from landowners because in these difficult times it offers an alternative to producing crops and raising animals. I believe that it will be many years before even the most ingenious and hardworking farmer will find a way of overproducing electricity.

There has been insufficient time to assess how much distress is caused to local people either by unsightliness or by noise from wind farms. But there is nothing more unsightly than a pylon in your own backyard—and we all had to get used to that. The sceptics, in particular those who support alternative forms of energy but "not in my backyard", should go and see for themselves as I did. I believe that the number of machines that we shall see in future will be limited by common-sense and by normal planning permission. Legislation is the only way in which we shall see a dramatic increase; the same legislation that brought us pylons.

I have dared only to come up with a few simple facts and figures. Multiplied by the number of wind machines on proposed sites throughout the British Isles they present a strong case and show that wind farming has a great future in Britain.

5.36 p.m.

Lord Wade of Chorlton

My Lords, I am delighted to be able to congratulate my noble friend Lord HolmPatrick on his maiden speech. His splendid effort was made even more remarkable by having to make his speech in rather unusual circumstances. We are all aware of the nervousness of the occasion. To see a huddle of noble Lords at the end of the Chamber before being called upon to speak must make the experience even more nerve-racking. Your Lordships might not he aware that he is also an important member of the House of Lords' tug-of-war team. Let us hope that he pulls as well as he speaks. The House of Lords will then again win a great victory. I agreed with his comments about the importance of alternative energy, in particular wind power which undoubtedly has an important part to play.

I am sure that all noble Lords pass on their best wishes to the noble Viscount, Lord Hanworth, if he is indisposed. We thank him for bringing forward the debate.

I wish to talk about two issues; the first is combined heat and power and the second is the opportunity for the use of bioenergy and biomass. Combined heat and power brings together the opportunity to reduce the use of energy and to use it more efficiently. Energy is the key to creating development, opportunities, growth and wealth. The sudden development of cheaper and easier forms of energy has created the great economic surges in our history. Since the middle of the last century we have been dependent upon oil as a cheap source of energy. It has generated the engine which has created the enormous improvements in people's lives and has led to the tremendous economic development during the past 100 or so years.

Inevitably there will be a change in that engine which creates and makes energy available not only to us in the West but to the rest of the world. It may well be that the great opportunity of the future will not be the discovery or development of a new source of energy but a more efficient use of the energies which are now available to us. The development of the technology will make those energies more available to the world at large and will make the use of our energy sources more economical and cheaper. That is the great opportunity now before us. Combined heat and power will, by bringing together all the technology needed to create from the use of one energy the development of another, be one of the key issues that we can develop.

There are certain opportunities that others in Europe have which we do not. Certainly to be able to sell automatically into the grid the electricity produced from combined heat and power would be another great stimulus and encourage many more companies to use it. There are more opportunities within our health service and schools to use and get the benefit of combined heat and power, which would reduce their costs very considerably.

In my view, the other area at which we must look is eastern and central Europe. Certainly when considering the way in which they run their industries it is apparent that the tremendous cost of energy has been one of the great difficulties in developing their economies. I hope that the Government will find ways to encourage those who can help in central and eastern Europe to develop combined heat and power and show the benefits of renewed energy systems because that will do a great deal of good for the developing economies of those areas. That is a great opportunity because Britain is so well ahead on combined heat and power technology, which we can sell and develop in the rest of the world.

The other matter to which I wish to refer is biotechnology and the opportunity in the future to produce energy from crops. Your Lordships may remember that last year the House of Lords' Select Committee on agriculture, under the chairmanship of my noble friend Lord Middleton, produced a report on non-food use of agricultural products. It used as its analysis a report published in 1986 which then estimated that in order to make crops viable with other energy sources —oil, at that time—there would have to be a subsidy of £67 per tonne, bringing wheat prices down to £45 per tonne before energy from wheat could compete with the price of oil.

However, it is interesting that in the past three weeks decisions have been taken as a result of the renegotiation and reform of the CAP that will bring down wheat prices within three years to £65 or £70 per tonne. In 1986 the price of oil was about 11 dollars per barrel. The price of oil now is around 22 dollars per barrel. There is considerable talk on the world scene about having further energy taxes which again will increase the price of oil. Some noble Lords may remember an interview which took place a few weeks ago with the oil Minister for one of the oil producing Middle East countries. He said that if the western nations wish to gain by taxing their oil—"our oil" as he described it—the producers should increase the price of oil so that they also get something from it. In other words, if the West increases the tax on oil, the producers will want more for it. Putting those two matters together there is every indication that, over the years ahead, the price of oil will increase and the price of our cereals will fall.

In addition, it is estimated that within the UK alone some 500,000 hectares will be taken out of production within the next three or four years, again as a result of the CAP reform. Therefore, it seems to me that decisions based upon facts emerging in the mid-1980s have changed dramatically and there is an important opportunity for us to look again at the use of crops for development into oil products and energy. Now is the time to take up that opportunity. We should not leave it until the fall in prices suddenly makes that possible because time is then taken to develop the technology efficiently.

I hope that in both those areas the Government can play an encouraging role—because I do not believe that governments should play too great a role—in the development of those two technologies.

Biotechnology and the more effective use of crops —crops can be more adaptable for this aspect—will also take great strides. The bringing together of all those new technologies can mean the rebirth of a new energy level which can be the stimulus to continual growth during the next century.

5.45 p.m.

The Earl of Shrewsbury

My Lords, I too congratulate my noble friend Lord HolmPatrick on an excellent maiden speech in fairly difficult circumstances. I hope that we shall often have the pleasure of listening to him giving us the benefit of his knowledge about various energy and environmental matters.

I have listened carefully to what my noble friend Lord Wade has just said about biomass and alternative forms of fuel through cereals and other methods. I agree with everything that he said but I should like to speak about more conventional fuels.

My particular interest within the field of energy is concerned with the opencast coal mining industry in this country and also the waste management industry, and in that I must declare an interest.

First, the opencast coal industry plays a vital part in the production of coal for the national generating bodies. I congratulate the Government wholeheartedly on the soon-to-be-privatisation of British Coal. We have a vibrant, indigenous coal industry in this country and it is my view that privatisation will open the doors to produce a much more competitive industry where a cheaper product will be produced to the benefit of industry in general and the individual customer.

A major constraint on the private sector in the past in the opencast business has been the tonnage licensing system. Although relaxed over recent years to a maximum extraction limit for private sector opencast operations of 250,000 tonnes, I hope that, as a part of the new legislation which will soon come before us, that tonnage limit will be scrapped.

In purely economic terms, there are economies of scale involved. It is much cheaper to win, for example, 500,000 tonnes of coal than 250,000 tonnes of that mineral. Thus, coal becomes cheaper to the generators and it follows that then, as a fuel, it can compete in economic terms with alternative fuels used in the production of electricity into the national grid.

However, even after privatisation there will still not be a level playing field in European terms as subsidies to the coal industry will still be in force in Germany and Spain. That anomaly will almost certainly have to be addressed at some stage in the very near future as this country cannot be expected to compete in Europe on unequal terms. As I have said before in this House on a number of occasions, there are many matters coming from Europe where we in this country find ourselves at a serious commercial disadvantage when conducting business with our European counterparts.

To sum up this particular subject, by the removal of the present tonnage licensing system, there will be provided cheaper coal and less need for foreign imports of this basic fuel. Therefore, that will bring considerable benefit to the Exchequer and the balance of payments.

As regards the landfill and waste management industry, as other noble Lords have already said, landfill of household waste is an increasing problem and such sites produce considerable amounts of methane, which is often dispersed through a venting system, into the atmosphere. However, there are some such sites which have already harnessed that problematic gas and are producing electricity into the national grid. I suggest that that process has a great future. Each year every household produces increasingly more waste and it must be disposed of in an environmentally friendly way. By producing and harnessing a potentially useful byproduct—methane —considerable benefits can be achieved. Although such a method of energy production makes but a small dent in the country's total energy requirement, it is a useful contribution, and one which has a long-term future.

5.48 p.m.

Lord Skelmersdale

My Lords, it is many months since I last referred in your Lordships' House to the, to my mind, great English satirists of the 1960s—Flanders and Swann. One of their themes seems to me to be appropriate for today's Motion on which I congratulate the noble Viscount, Lord Hanworth, in his most regrettable and unfortunate absence, for bringing the views of my noble friend Lord HolmPatrick to our attention. Never can a maiden speech have been made by a hereditary Peer in such unusual circumstances. I congratulate the usual channels on going on with the debate and my noble friend, not only for his bravery, but also for getting this debate onto the rails with such verve by talking about alternative energy.

Perhaps I may say in passing that, contrary to what one might gather from the list of speakers today, there is no north west or perhaps western Mafia in the energy field on this side of your Lordships' House, although my noble friend Lord Wade may have known some of the maiden's thoughts as I thought the two speeches went together hand in glove and worked together extremely well.

The theme to which I refer is the Flanders and Swann reformulation of Sir Edward Boyle's famous chemical law. As I recall, it went, "The greater the external pressure, the greater the volume of hot air". As debates in your Lordships' House have shown over the years, we are great agents of external pressure but are the exception that proves the rule. We rarely if ever get hot air from governments of any persuasion as a result. I am sure that we will not do so from my noble friend Lady Denton who has the unenviable task of responding to what I anticipate will be a wide-ranging debate this evening.

Many years ago I met what can loosely be described as "hot air" in Costa Rica. A British veterinarian under contract to the ODA had spent much of his time in a veterinary research institute developing a simple methane generator. He had joined a number of thick black fertiliser sacks together, laid them on a slight slope in the sun and channelled slurry from the cow shed through them. A pipe led from the centre of the contraption to a twin ring gas burner. When I saw it a large saucepan of water was boiling away merrily. Ever since—that was 10 years ago—I have believed that that could be the start of an energy policy for rural areas in the third world. At no cost a waste product goes in and gas and a low-grade fertiliser or fuel comes out at the other end.

I am ashamed to say that the ODA did not share my enthusiasm. The vet in question nearly got the sack from his contract, in spite of the enthusiastic support from the then Ambassador. To the best of my knowledge unsophisticated technology of the type I described has never been widely taken up. Cheap energy is as much a human requirement as cheap food or water. After all, all those things sustain life on earth.

Moving closer to home, in recent weeks, since visiting British Gas in the Recess, my thoughts have become much more high-tech. I have been trying to work out for myself what the Government's electricity policy actually is today and how, or rather whether, things have changed under the new regime of the primary sources of energy being treated as industries in the same way as, for example, the car industry under a ministerial team in the DTI.

I congratulate my honourable friend Mr. Eggar on his appointment as Minister for Energy. He comes to this newly created post at a time of both opportunity and challenge for energy. It is a time when stocks of plutonium will last for something like 400 years if used wisely and consumed not in a fast breeder reactor of the type we know at Dounreay, which was indeed designed to breed, but of the type which is being developed on the continent—one that consumes all its own nuclear waste. I suggest that that is a better solution than the potentially dangerous long-term storage of such wastes which have half-lives of thousands of years.

Be that as it may, around 5 per cent. of our electricity comes from nuclear power. As I understand it, that is to continue as it is a good way of producing base-load electricity. Many of us cast envious glances at the French with their much higher proportion of nuclear and hydro-electric schemes leading to extremely cheap electricity. That electricity is imported into this country at moments of stress through the under-Channel link.

Coal has always been the primary fuel for the bulk of energy generation. The trouble is that British coal expensively mined, as it has been in the past, had been pricing itself out of the market until the Government began a massive £8 billion investment programme with the objective of producing cheap coal for the nation. As my noble friend Lord Shrewsbury said, our imports have been growing at an alarming rate. That may be healthy for the generating companies but it certainly is not healthy for the long-term future of our coal industry. In passing, I have noted the words of my noble friend the Lord Privy Seal in another place when, as Secretary of State for Energy, he said that the way to achieve cheap electricity was for British Coal to achieve new long-term contracts when they came up for renewal in the near future. He was sure that they would. At the same time he inferred that he was not against imports as long as the exporting countries were not subsidising production unfairly. That was another point made by my noble friend. I noted that during the last Commons energy Questions before the election, Germany was specifically criticised in that respect.

It is not only cheap imports of coal that are putting pressure on the system. The potential of using gas in generators has been at least as great a challenge to the coal industry here as have imports. Not only is it cheap, but also it is a low polluter. It is easily and safely delivered direct to the consumer's premises without the need for unattractive road and rail transport. It is no wonder that we are seeing what has come to be known as a "dash for gas". That is an expression on which I am not keen but it works as a descriptive phrase.

My right honourable friend the President of the Board of Trade said that he does not want to see that taken too far. But how far is too far? The electricity industry has a duty to go for the cheapest primary fuels available. That must mean the cheapest after environmental costs are taken into account. At least, I assume it must, but to say the least the signals are a little opaque in that respect at the moment. Perhaps my noble friend will be able to give us some guidance.

The point the department must bear in mind is that by influencing either the generators or any one of the primary fuel producers, there will be an inevitable knock-on effect on the others in the chain. With the exception of nuclear, they are all either in or about to be in the private sector. That has a direct effect on their ability to raise capital. It was that more than anything that persuaded me that they would be far better off in the private sector. My noble friend Lady Denton will recall that I have made that point before—and recently. I make no apology for repeating it.

Up to now capital has been available from the City for the investment that is so badly needed and doled out sparingly by governments over the years. Money is needed for the replacement of generators, for cleaning up the environment and for the prevention of leaks. Years ago I knew the figures for the leakage of electricity, water and other fuels. Today I have only been able to check the gas figure, which is around 1 per cent. and I am told is falling. It is falling because of the replacement of cast iron pipes by the new alkathene piping and the development of the intelligent pig which identifies weakness in pipes before they actually crack.

Of course, all that is at a cost, and a cost which must be paid for. If the companies are so bound up by regulators and the Office of Fair Trading that the net result is that capital becomes more and more difficult to attract, nobody wins—the consumers because costs will rise; the environment because leakages and airborne pollution go on far longer than they should; and the shareholders, whether large or small, because they will not receive the profits that they were either promised at the time of the various privatisations or have come to expect subsequently.

It is fashionable for government Ministers to tour the world looking for better ways of doing things in this country. I hope that my honourable friend will go to America for exactly the opposite reason. It is true that he will find the ultimate in competition. But he will not find a happy state of affairs in the gas industry. Information has reached me that, although it is cheap and environmentally friendly, it has been losing market share consistently throughout the 1970s and 1980s. From 1970 to 1988 figures show that the gas market share fell from 39 per cent. to 34 per cent. of the United States energy market. That is a different picture from that in the United Kingdom where, over the same period, it has quadrupled.

A little research will show whether or not my information is correct. I am told that supplies are becoming more and more unreliable; the regulatory authorities have changed policy several times and the market is fragmented, often resulting in the purchaser being responsible for the transport from the wellhead. The last point I take particularly seriously as, not only is the leakage figure said by some to be an unbelievable 15 per cent., but also because I was proud to play a part in the Oil and Gas Enterprise Bill in the early 1980s which not only put transport of gas firmly where it rightly belongs—with the supplying company—but also opened the pipelines to other producers of oil and gas. When that was reformulated in the Gas Act 1986 it was extended to cover any supply company, a form of competition of which I am sure the whole House would approve.

I have not answered my own questions. All I have achieved is to produce a few thoughts for the Government's consideration. In this House we are delighted that the Government have agreed with your Lordships' Select Committee on the European Community that energy and the environment are inextricably entwined; that they believe in cheap energy and a multiplicity of primary producers. I hope that this debate will result in showing how the Government intend to unify all these rather disparate strands.

6 p.m.

Viscount Mersey

My Lords, in his absence, I would like to thank the noble Viscount, Lord Hanworth, for making this debate possible. I am sure that we all join in wishing him a speedy return to this Chamber and completely fit. I also congratulate my noble friend Lord HolmPatrick on making such a splendid maiden speech in adversity, one might say.

In such a wide-ranging debate as this I think it important to narrow down to specifics. I wish to speak about three things; the first is the Drax power station, the second is the Lloyd's building and the third is birth control. All three, strangely, form a sort of trinity or the three legs of a tripod, one could say. The first leg of the tripod is Drax. It is our biggest power station and generates five gigawatts electric. Noble Lords will know that National Power are retrofitting scrubbers to this mighty edifice, which is coal-fired and which therefore emits sulphur dioxide. The scrubbers will cost more than the original power station and they will need power to operate them—indeed, 4 per cent. of Drax's total generating capacity. Thus, while Drax will emit less sulphur dioxide it will emit 4 per cent. more carbon dioxide. In terms of greenhouse gases the Drax scrubbers are bad news.

At Drax there are also material handling problems. On top of the thousand of tonnes of coal fed into Drax 24 hours a day there will be thousands of tonnes of limestone hauled in and then converted by the scrubbers to gypsum. Then thousands of tonnes of gypsum will be hauled out. All that movement will generate more heat. The good news is that Drax is using some of its heat. The greenhouse gases are ripening tomatoes in a vast complex of real greenhouses nearby. It is thus a rather peculiar type of combined heat and power plant.

At this stage I must declare my interest as being the present president of the Combined Heat and Power Association and also tell noble Lords the good news that my noble friend Lord Wade of Chorlton will soon be succeeding me. From what he has said so far, he clearly has a much better grip of the subject than I have gained in the past three years. But I hope that my specific example of the tomatoes at Drax has illustrated to noble Lords that CHP is a versatile, elegant and sophisticated technology that is certainly environmentally friendly. It is not necessarily simple enough to solve the greenhouse gas problem worldwide. Even at Drax one problem begets another. The scrubbers emit the carbon dioxide; the carbon dioxide grows the tomatoes; but then the tomatoes themselves have to be moved from Drax in their millions and the vehicles carrying the tomatoes emit yet more carbon dioxide.

The second leg of this somewhat peculiar tripod is the Lloyd's building in the City. I must mention that on my way there, as it were, CitiGen's new combined heat and power station in Charterhouse Street will produce 90 megawatts electric when completed. It is similar to the Lloyd's system, in that they are not really combined heat and power stations so much as combined cooling and power stations. The need in high-rise office blocks nowadays is to lower the temperature and not to raise it. I gather that even on the coldest January morning that is the case. True, at around 7 o'clock on a Monday morning in particular, the underwriting floors at Lloyd's are cold and they should be heated up to around 20 degrees centigrade, which I believe is the optimum working temperature.

But by 2 p.m. that 20 degree centigrade will be 23 or 24 degrees and that is simply due to the body heat of the 5,500 underwriters, each of whom gives off 200 watts. In fact, the underwriters are generating 1.1 megawatts thermal themselves. Lately, indeed, some might have had cause to wonder whether underwriting insurance is not a rather less attractive option than turning oneself into a very small power station. One syndicate of five underwriters equals one single bar electric fire. Syndicates apart, it proved very difficult in the early days to keep the Lloyd's building cool enough. Parts of its rose to 120 degrees Fahrenheit. Once more, the solution lay in combined heat and power.

Lloyd's air conditioning system is complicated indeed. It is based on an Alice Through the Looking-glass law of thermo-dynamics which seems to be that cold air rises and hot air sinks. The cold air is pumped through vents in the floor and extracted by fans in the ceiling. It is drawn up to the top of the four service towers, by which time it is fairly hot. It is then pumped down through voids in the windows, which are triple-glazed. Then it is cooled by water. The water in its turn becomes lukewarm at about 90 degrees Fahrenheit.

The elegance of the system is that this warm water is then further heated until it is hot enough for the washrooms, showers and kitchens. Thus, Lloyd's has a remarkably efficient combined heat and power system which both cools its building and produces cheap hot water. But, as with Drax and the tomatoes, there is a much more serious downside, or danger. The tanks of cooling water at 90 degrees Fahrenheit provide the perfect environment for the growth of the legionnella bacterium. Noble Lords will recognise how deadly that can be when they recall that similar water tanks on the roof of the BBC in Portland Place became infected and killed people walking in the streets below. The only way to stop that bacterium multiplying is to clean the tanks to the point of sterility. There is thus a downside to every elegant solution that heats as it cools as it lights and as it powers efficiently. The downside can usually be overcome, but at a cost.

CHP is certainly a very attractive option abroad, as my noble friend Lord Wade has already remarked, particularly in the former communist bloc—for instance in countries where there are already rather inefficient networks, such as Poland. Poland has a district heating network of pipes carrying water which is very hot at 200 degrees centigrade, but at least half of that escapes through cracks in the pipes and is wasted. At this stage, I should like to ask my noble friend on the Front Bench this question: is there yet a successor body to that headed by Colin Moynihan in the previous Parliament? In short, which Government Minister is at the moment in charge of alternative energy, or is no one yet in charge of it?

As the combined heat and power president, I am tempted to plead specially that our technology is the ultimate answer to all the world's energy problems. But on economic grounds I cannot do that. CHP has its place, but the main place must be taken up by the third leg of the tripod, which is contraception; a simple rubber sheath, cap or coil. People use energy; more people use more energy; fewer people use less energy. Birth control is cheaper than clean technology. It is cheaper than efficient technology. The least polluting power station is the one that is not built. It is for that reason that the ultimate challenge for those at the Rio summit must be to limit the world's population. That is indeed our best long-term energy strategy.

6.9 p.m.

The Earl of Lindsay

My Lords, I am grateful to the noble Viscount, Lord Hanworth, in his absence, for raising such an important issue and to the noble Lord, Lord Tordoff, for stepping into the breach at such short notice. I must also congratulate my noble friend Lord HolmPatrick on an excellent maiden speech and on a very good choice of subject matter. Wind power may seem rather distant to many of us but it is an important issue. It is one to which I intend to return later in my own thoughts.

I start with the problems being created by our current dependence on coal burning for energy. At present 80 per cent. of British coal is burned in coal-fired power stations to produce 77 per cent. of our current electricity consumption. Whatever the future of British-mined coal, sources of cheap imports elsewhere in the world ensure that coal will remain a significant source of electricity for us. However, burning coal in power stations is environmentally disastrous, resulting in substantial emissions of both carbon dioxide and the two principal constituents of acid rain—sulphur dioxide and nitrous oxide.

It is somewhat chilling when one learns that 64 per cent. of British trees show some damage from acid rain; that 25 per cent. of our trees show moderate to severe damage and that severe damage also affects roughly 35 per cent. of Europe's trees, equating to an area of approximately 50 million hectares. The extent of the damage reflects the fact that, for every single tonne of coal burned, 12 tonnes of wet flue gases are released. Therefore, a medium-sized 500 megawatt power station pumps out about 15 million tonnes of those gases every year—and those are just acid rain gases.

Acid rain is also responsible for the corrosion of buildings and other structures, and for the leaching of heavy metals from our soils into our watercourses. While rain in Britain is now between 10 and 16 times more acid than it was, a 1988 sample in Pitlochry recorded rain with a pH as low as 2.4, which is 1,000 times more acidic than pure rainfall. At this level, the aquatic life of our rivers and lakes is seriously threatened—not to mention those downwind of us in Norway and Sweden.

However, the dilemma lies not so much in what is happening as in how we should be responding. The flue-gas emissions of coal-fired power stations must be tackled, but the task is hugely expensive, costing some £200,000 per megawatt of installed capacity. Therefore, for a 1,000 megawatt power station, the bill will be £200 million. For a new power station to be built with ready installed flue-gas desulphurising technology, capital costs rise by 30 per cent. Our obligation at present is to treat 8,000 megawatts of our current 35,000 megawatt installed coal-fired capacity. From a purely environmental standpoint, that may be disappointingly small, but financially the capital cost of treating just 8,000 megawatts could be £1.6 billion —and there are operating costs on top of that.

Who is going to pay? Is this a burden that falls to the taxpayer—or, on the principle that the polluter pays, should the operator, and therefore the user, be paying—or should it be a combination of both, with some government grants and some loans? Charging it all to the user will be controversial for those users who do not have any choice and will attract the attention of the Office of Electricity Regulation, which is obliged to hold down electricity price rises. Where users do have a choice, coal-fired sources will have problems competing with cleaner sources of power. But where does this leave the prospects of a privatised coal industry, given that the power stations are its principal market?

Charging the taxpayer, however, ignores the polluter-pays principle and distorts the marketplace by subsidising the external costs of coal-burning. This will act as a disincentive both to cleaner sources of power and to market-led environmental research and development.

This is an important repercussion. Clean coal and coal gasification technologies, for instance, remain too primitive for power stations exceeding 250 megawatts, and it is estimated that it will be 18 years before they will be sufficiently advanced to install in 1,000 megawatt power stations. My noble friend the Minister could perhaps tell us whether the Government intend to continue, and if so to what extent, their research into clean coal-burning technologies. It is also important, in the shorter term, to know who is going to be funding the cleaning up of existing flue gases in the light of the privatisation of the coal industry.

There are no easy answers to many of these problems. The only solutions that could be effective in the short term are massive in their scale and consequences. For the next two decades, coal has got to be either unacceptably dirty in terms of its environmental repercussions or unacceptably expensive in terms of its economic and social repercussions. Furthermore, paying for and installing FGDs not only fails to tackle carbon dioxide emissions but actually increases them. My noble friend Lord Mersey has illustrated that point.

There are two other complications. By the year 2010, for instance, two-thirds of our existing coal-fired power stations will be at or beyond the end of their designed lifespan. What happens next? And what decisions should be taken now in anticipation? The complexities underline the importance of a long-term strategy for energy generation and use; and, as with any long-term strategy, it is only going to be effective if it provides the framework within which short-term decisions are made.

The future of coal-fired power stations is just one fundamental issue where short-term policy must not lose sight of long-term strategy. There are others. Already subject to considerable debate is the role of gas-fired and nuclear power stations, and their relationship in the marketplace with electricity from coal sources.

Also subject to some attention are the means of encouraging energy conservation and efficiency. On this issue, there is the need for yet greater determination, as such measures promise to be extremely cost effective. One likely problem, however, is that, if the sources, generators and distributors of energy are private companies, the market will be dominated by interests vested in greater consumption. How, then, does one drive home effective energy conservation and efficiency initiatives? One possible solution has emerged in California, where the power companies sell not only power, but also the goods and services that are required by their customers for its conservation.

One of the most important elements of a long-term strategy on energy generation, and therefore deserving of comparable status in short-term policy-making, is the role of renewable sources, which several noble Lords have mentioned. Many are familiar with hydro-electricity and pump storage; but what remains poorly acknowledged is the potential of other methods of water-driven generation, and the potential of solar, wind and biomass sources. Even where potential is actually proven, organisation, incentives and funding are very often disappointing. We are still waiting for the publication of the findings of the Renewable Energy Advisory Group, which was due first at the start of the year and then in March. Perhaps my noble friend the Minister can tell us if and when this will happen.

Altogether more significant is the 1998 cut-off of the levy on fossil fuels. The immediacy of 1998 is constraining those involved in the research, development and operation of renewable sources of energy. Such technologies can often take 15 to 25 years to bring into full production. Perhaps I may suggest that we should have a rolling period rather than a cut-off that operates right across the board.

It is misguided and misleading to treat renewable energy sources as a Cinderella while lavishing attention on the older and uglier step-sisters. The United Kingdom, for instance, has the best wind potential in Europe, with 40 per cent. of the continent's wind energy resources. In 1988 the Department of Energy estimated that 20 per cent. of our total electricity consumption could be met by our on-shore wind resources, while 50 per cent. could be met by our off-shore winds. Energy experts, furthermore, point out that this off-shore study assumed that wind generator sites would be more than 15 kilometres from the coast. Without this parameter, the potential contribution of off-shore wind generation could be considerably more.

The important point is that for the United Kingdom wind generation is not a marginal asset and should not be treated as such in short-term policy. However, without sufficient recognition and encouragement, the technologies involved and the benefits that will accrue will both be unnecessarily delayed.

Also subject to delay will be the proper resolution of any perceived drawbacks that attach to wind generation. Wind power, after all, throws up an intriguing dilemma. It is a perfect alternative to the polluting emissions of coal-fired power stations and to the consequences of acid rain; but to exploit this potential effectively may involve siting wind generators in sites noted for their natural scenery.

Wind power remains an unfamiliar concept and therefore the prospect of generators being visible either from one's own backyard or from an area such as a national park is unnerving. My noble friend Lord HolmPatrick touched on that point in greater detail. The public's perception will be important to the development of wind generation. My noble friend mentioned the wind farm at Delabole in Cornwall, to which there has been a surprisingly good response, much better than the backers and operators had anticipated. Of passing interest is the fact that it has been popular with the local tourist industry because the wind farm itself has become a visitor attraction. In Denmark, where the wind generation industry is much better developed, there has been a good public response to the technology that has had to be installed.

Looking ahead to the possibility of many machines in many areas, the public should be made fully aware of what the benefits and options are. On a national level, the benefits are obvious, but at an immediate local level, the impact of wind generators may be less digestible. My noble friend Lord HolmPatrick mentioned the noise problem. I understand that the latest wind machine technology is considerably less noisy than the earlier machines.

The fact that wind machines are visibly intrusive has been unwittingly aggravated by the 1998 cut-off of the fossil fuel levy. The uncertainty and the ever-shortening timescale is forcing wind energy operators to seek average wind speeds of no less than 7.5 metres per second in order to cover costs. They therefore have to be sufficiently high on hillside sites, which increases their propensity for intrusion. If the protective timescale was extended, making average wind speeds of 6.5 metres per second viable, the number of potential sites would double to include many less conspicuous locations.

Notwithstanding what I hope is only a short-term aberration, the positive reaction in Cornwall bodes well. That assessment would be further enhanced if the districts and communities involved could become more closely involved. It might, for instance, be possible for them to derive some benefit from that wind power which is locally produced but sold to the national grid. Local surpluses are highly probable in some areas. A 1990 study for Dyfed county council concluded that, with existing technology alone, the county's entire electricity consumption could be met from renewable resources, while anticipated technology could enable it to produce 12 times that figure. Also of relevance to the public perception is the fact that wind generators should not be confused with the blundering severity of pylons. It is important to counter the assumption that anything that smacks of being a wind generator must automatically be ugly. They need not be ugly, and they need not be unpopular. But, despite this, wind generators will present a challenge for planners and will be an interesting source of comment for the public.

It is also important to realise that being relatively well endowed with renewable resources allows us not only to exploit them for our own needs but to exploit the associated technology for everyone else's needs. One source predicts that, at a global level, as environmental problems increase and the reserves of fossil fuels decrease, the development and export of this technology will be as valuable to the next generation as the trade in computer technology has been to this generation.

The United Kingdom must not miss out, though, if we hang around, we shall. Denmark has had many successful onshore wind energy projects and now has two offshore wind energy projects. The Swedes have joined them on this offshore bandwagon. India is aiming for 5,000 megawatts of installed wind power by the year 2000 and California is probably the furthest ahead of the game. On a global basis, it was estimated last year that wind energy alone is already offsetting some 2 million tonnes of carbon emissions per year.

How sensible, therefore, is the uncertainty that surrounds the finish of the fossil fuel levy in 1998? My noble friend the Minister might take this opportunity to remove the uncertainty. It is becoming a disincentive to valuable research and development; it is undermining potentially huge export earnings in the future; and it is slowing the advent of one of the most environmentally friendly methods of power generation. As with the future of coal-burning power stations, this, surely, is an issue where a long-term strategy is fundamental to short-term policy.

6.22 p.m.

Lord Addington

My Lords, I have the very pleasant duty of being the first speaker from these Benches to congratulate the noble Lord, Lord HolmPatrick, on his excellent maiden speech. If he can make such a good speech under somewhat unusual circumstances, I very much look forward to hearing his future contributions.

When we deal with a Motion on energy policy we find ourselves touching on a large variety of subjects. Modern society is addicted to energy. The noble Earl, Lord Lindsay, referred to computers. Computers use electricity. We need electricity for most things. There is always a price to be paid for any consumption of energy.

The speech of the noble Lord, Lord HolmPatrick, dealt largely with wind power. Even with wind power we have to put up with a little noise pollution and a slight inconvenience to one or two views. Ultimately we have to pay a certain number of prices. It is probably better to look at an environment which has a few trees remaining on it and has one or two wind farms than a place which has been completely stripped of all foliage by acid rain. We must be more realistic about these choices. If we are to live in any way that relates to our current energy-rich lifestyle, we must encourage lower consumption of energy by utilising the technology that is available to us now. We must be capable of cutting down dramatically the amount of energy we use in what we regard as our daily way of life; for example, on the way we heat and cool our houses and offices.

We must also consider transport policy. In this country the fact that the subsidy given to company cars is around five times that given to British Rail suggests that we shall have a hard decision to make in the future. Is the car to be regarded as a normal mode of transport for virtually all forms of journey, short, medium and long term, or is it to be restricted to medium-term transport, allowing public transport of various types to take over the longer and shorter term journeys? I suggest that the many pressures on us with regard to environmental damage and the conservation of fossil fuels, such as petrol and oil-based fuels, mean that we shall have to look hard at trying to produce some form of carbon tax which will create a disincentive to using cars as frequently as we do at present. We must also have education on this issue. It is regarded as a status symbol to have a large car. We have a cycle of expectation which means that there is less incentive for central authorities or even private investors to provide other forms of transport. If the Government have more initiatives on education about the consumption of energy and the way we live our lives, I shall be pleased to hear about them.

On these Benches we are also concerned about nuclear power, a subject which has already been mentioned in the debate. Nuclear power carries a terrible latent risk. No matter what happens there is always a risk. On these Benches we are keen to see nuclear fission reactors taken out of mainstream use. We believe that that could be accomplished by the year 2020. It is not because we are completely opposed to nuclear power. It is because we realise that there is always a waste product and there is always danger.

Many of the points that I wanted to make have already been made. However, I wish to ask one or two questions of the Government. Although they have taken certain initiatives—for example, on lead free petrol—when will there be a more centralised energy policy with longer term objectives? I appreciate that the Government intend to stabilise carbon dioxide emissions by the year 2000 as opposed to the year 2005. When will they finally form a policy which attracts all the different strands of energy consumption? How does energy consumption tie in with their vision of how the rest of the world will be living? Will we, for instance, be having tighter regulations about maximum efficiency in the use of machinery?

6.27 p.m.

Lord Donoughue

My Lords, I join other noble Lords in congratulating the noble Lord, Lord HolmPatrick, on an excellent maiden speech. We look forward to hearing from him on many occasions in the future. I congratulate the noble Viscount, Lord Mersey, on an excellent speech which gave us a wholly new angle on Lloyd's insurance. I wonder whether the fact that five Lloyd's brokers equal a one-bar electric fire may explain why so many members get burned. I worry that his explanation of a further down side, as he called it, at Lloyd's of a lethal disease lurking on the roof will worry many and lead to a further exodus. I also wonder in passing whether stop loss policies could be adopted and adapted to the energy sector.

If I may focus on the central issue, the Motion is wide and very important. I should like to take up the international dimension from the original Motion and point out that the future increase in demand for energy will come from the developing countries. Their total consumption will soon overtake that of the developed countries. That has important environmental implications. I note in passing that Eastern Europe is responsible for nearly a quarter of the world's carbon dioxide emissions. With China and India industrialising, the pollution problems in the future are potentially quite terrible. The world's atmosphere knows no environmental boundaries. That situation, linked to Rio, points to programmes of technology transfer—for example, in the clean coal technology area—which will enable economic growth to continue in the developing world, while being compatible with environmental protection. Such programmes are of importance to us all.

Even more pertinent to the main issue, I should like to ask both the Minister and the House: how can the Government develop an international dimension to energy policy? How can they develop their part in the EC energy policy or in the real aspects of environmental protection when, basically, we do not have a national energy policy for the United Kingdom? I feel that that was symbolised by the abolition of the Department of Energy. I, for one, certainly regret that development. It gives the wrong signal in this crucial area.

Historically, the United Kingdom's approach to energy has, admittedly, always been pragmatic and usual reactive to international oil crises. I believe it is true to say that we have not actually had a White Paper on fuel policy since 1967; that is, before oil had been discovered. Of course, since the 1980s that pragmatism has been replaced, or perhaps larded, by the ideology that positively rejected the idea of energy policies and strategies and relied on the free market through privatisation, coupled with a touch of regulation. I believe that the result is the present confusion in the energy area and certain damaging developments.

Energy privatisation has not created competition; it has produced private monopolies and oligopolies. It has led to a situation where the electricity generators are dashing for gas and we have had massive coal imports. Moreover, our coal industry has been rushed towards extinction and our natural gas reserves are being rapidly depleted. In fact, that energy muddle —as I would call it—cannot be allowed to continue, bearing in mind that the United Kingdom faces a future where our energy self-sufficiency will end early in the 21st century, where the environmental constraints will grow and where, specific to the sector, I believe that all our generating plant must be replaced within 25 years. Therefore, I think that the Government must develop a coherent energy strategy. It cannot be left to the regulators who have no responsibility for an overview, and no responsibility for the national interest.

Government must develop that coherent strategy. They must do so for a number of important reasons; namely, energy, economic, environmental, social and industrial reasons. The intrinsic energy reasons exist because it is necessary to identify a desirable balanced mix of energy sources which will ensure security of supply. The latter must be a basic objective. We must also ensure a responsible depletion of the limited indigenous sources that we have. That particularly concerns gas and oil which are in limited supply and coal which is virtually unlimited but environmentally difficult.

The environmental reasons are that our economy must have secure supplies at reasonable prices. Therefore, in my view, it must not be wholly subject to the whims of overseas suppliers or to the fluctuations of import prices at various currency variations. I should like to ask the Minister whether the Government actually have a view on the value of energy self-sufficiency for the United Kingdom. Alternatively, are the Government content to expose our economy to the uncertain costs of energy imports?

The environmental reasons are obvious to anyone following the current conference in Rio. The Government obviously must have an environmentally-sensitive energy policy. The four main causes of pollution are all energy related. They are, first, electricity generation; secondly, transport consumption; thirdly, industrial consumption; and, fourthly, household consumption. The three energy technologies which are the most clean are conservation, renewable sources—that is, sun, wind and water—and nuclear. Against that background, the Government must encourage the correct environmental priorities among the energy-sourcing options available to them to constitute a coherent energy policy which is sensitive to the environment.

The social reason, which very much concerns this side of the House, is that the changes in the pattern of production and supply have profound implications for employment and social life in our regions. Here, one is especially referring to coal. The industrial reason why the Government must be involved in the matter and cannot stay out of it is that the electricity and gas industries are monopolistic. Therefore, the energy market is fundamentally imperfect. The public interest cannot be left to ad hoc regulation; it needs government policy and intervention.

That is the case for a coherent energy strategy which is mentioned in the Motion. But what should it be? I shall try briefly to set out the components involved. We should begin with greater conservation, which must be pursued more vigorously. In 1988 the then Department of Energy said, and most experts agreed, that there was scope for 30 per cent. energy savings through conservation. Can the Minister say how much of that 30 per cent. has been achieved, and when the new department responsible will achieve the remainder?

Therefore, conservation comes first. The next consideration must be a policy for electricity generation which is at the heart of many of our energy concerns and problems. I believe that government policy should place a series of obligations on the electricity generating industry. First, there should be an obligation to maintain security of supply which used to apply before privatisation. That, by implication, includes maintaining the UK coal industry and ensuring that there is care for the rate at which natural gas is depleted. Secondly, there should be an obligation to encourage conservation, which I have already mentioned. That should apply specifically to the electricity generators because, currently, their sole incentives are to expand production and sales and not to conserve. Thirdly, there should be an obligation to pursue environmental protection especially as electricity generation is a major source of carbon dioxide and sulphur dioxide emissions.

It follows that the electricity industry should be expected to devote more research and development expenditure to clean coal technology, and not less, as has been the case since privatisation. The generators should also be required seriously to encourage renewable energy sources. That means through long term contracts. I support very much the remarks of the noble Earl, Lord Lindsay. Those are all matters of national interest for government, not just for regulators.

More specifically, and as I have already mentioned, the coal industry has been rushed towards extinction, with perfectly viable and profitable pits recently closed as the power generators have turned to foreign coal and to gas. That process of industrial assassination has apparently just been halted under pressure to preserve some coal profits for privatisation. But, again, there are wider policy concerns and considerations than simply the commercial profit interests of British Coal and the generators; namely, security of access to domestic coal. For that reason, I repeat the fact that the development of clean coal technology for the UK to transfer to the new industrial nations such as India and China should have the highest priority in a coherent energy policy.

Energy policy must cover transport, now the largest energy using sector. It overtook industry and subsequently the domestic sectors in the late 1980s. Transport demand has increased by more than 100 per cent. in the past three decades. That will continue with enormous environmental implications. We need government initiatives affecting the individual use of cars through regulation, fiscal instruments, road pricing, vehicle standards, traffic management and above all the provision of more efficient public transport.

Finally, I turn to energy research where the Government's expenditure is very low by international standards; mainly on nuclear research. I link that again to the need for more research into clean coal technology and transport consumption of fuel.

I believe that we lack a proper energy strategy as called for in the Motion. We need such a strategy, meeting our energy, economic, environmental, social and industrial considerations in a coherent way. I have tried to set out the basic necessary components and I look forward to hearing whether the Government have any such vision of Britain's energy future.

6.42 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)

My Lords, I am extremely sorry that the noble Viscount, Lord Hanworth, was unable to introduce today's debate. The cause of his absence must, by its fact, be serious. I am sure that noble Lords will join me in hoping that it is temporary. We must be grateful to the noble Lord, Lord Tordoff, for allowing us to continue with the debate, in particular so that we could hear the maiden speech of my noble friend Lord HolmPatrick. I join wholeheartedly in the congratulations. I shall only say that I hope that the risk factor of tug-of-wars does not mean that injuries will prevent him from speaking to us again in the near future.

The subject of this debate is important and it was important that the debate took place. There is no doubt that the production and use of energy is fundamental to the development and growth of economies across the world. The substantial increase in energy consumption which has occurred since the end of the Second World War has been instrumental in helping to raise the standards of living of people throughout the world. If developing countries are to enjoy the benefits which the developed world has taken for granted, then a future rise in the demand for energy will be inevitable. Advances in energy technology, improvements in the efficiency with which energy is supplied and used, and the continued discovery of new energy resources have so far managed to out-strip rising demand. The world's proven reserves of oil and gas are seen to be higher than ever before. Coal and uranium reserves remain enormous. The potential also exists for considerable supplies of energy from renewable sources, as we have heard this afternoon, if and when they can be harnessed in an economically feasible fashion. But, that does not mean, of course, that we can afford to be profligate in using these resources. Nor can we afford to ignore the implications for the environment. Quite the contrary, for no source of energy is totally environmentally benign. That is why we all—governments, producers and users of energy—have a responsibility to work to limit the environmental consequences of supplying energy needs.

In the UK we are in the fortunate position of having considerable resources of coal, oil and gas and long experience of civil nuclear power along with the potential to make greater use of renewable sources of energy. I am pleased to reassure the noble Lord, Lord Donoughue, that there is not the muddle that he fears. The Government's policy is to ensure that the nation has adequate, secure and diverse supplies of energy at competitive prices and in an environmentally responsible fashion. I hope that that policy statement will reassure my noble friend Lord Skelmersdale too. This requires that we maintain diversity and flexibility in the types of fuel we use to reduce the risk of dependency on any particular fuel. I am sure that it was not necessary for a Gulf War in order to bring that message home. It requires that an efficient and effective regulatory regime is in place.

We have given effect to this policy through the following measures: privatisation of gas and electricity; liberalisation of the energy market coupled with effective regulation; supporting nuclear power and renewables through research and development and the non-fossil fuel obligation and the fossil fuel levy; ensuring that the taxation of our considerable oil and gas resources provides companies with the incentives to explore and develop fully these resources; by carrying out a major investment programme to modernise our coal industry to enable it to compete—and the size of that investment was referred to earlier; and by devoting considerable effort and resources to energy efficiency. By these means we have ensured that the UK has substantial energy resources covering a broad balance of fuel types capable of meeting the requirements of our consumers well into the future at the lowest possible cost of supply.

In the past, UK governments have tried to reconcile the competing claims of coal, gas and oil and nuclear energy by centralised planning. In fact, central planning and energy policy became synonymous in the minds of many and, unfortunately, there are still many who think this way. Without exception, these indicative plans failed. Governments are simply not omniscient in predicting future relative prices of fuels and levels of supply and demand in energy markets nor, indeed, in anything else. And, more important, concentrating decisions in this way stifled enterprise, ensured that when mistakes were made they were made on a major scale and made decision-making vulnerable to special pleading of organised interests.

The exploration and production of energy resources has long since been a global business. More recently, the global dimension of energy consumption has been recognised in the debate over environmental pollution and global warming. The UK Government have been very much at the forefront, taking a constructive role in this debate. I am pleased to reassure my noble friend Lord Shrewsbury that we are very much concerned with policy in Europe.

Within the European Community we attach considerable importance to the completion of the internal market in energy. The Commission has produced draft directives on electricity and gas designed to reduce the very considerable barriers which currently exist to trading these fuels. The Government fully accept this objective and intend to make it a high priority during the forthcoming UK presidency to facilitate these moves towards an open and more transparent energy market in Europe. It is ironic that these most basic of commodities are not yet traded in a single internal market. I am sure that all noble Lords will be pleased to hear of the government's focus in this area.

The European Commission announced on 13th May that it proposed to send a draft directive for a carbon and energy tax to the Council. We have yet to receive a copy of their proposal, but we will clearly need to study it carefully. There is no question of taking premature decisions on this important issue. We understand that the Commission has said that the introduction of the tax would be conditional on other countries adopting similar measures. We see this as a welcome development on their previous proposals for a unilateral European tax.

I have referred to the global issues raised by energy consumption and the growing concern about the ability of our planet to go on absorbing the waste and related products from continued increases in energy production without causing growing damage to our global environment. This matter concerns many noble Lords who have spoken today. The UK Government are pleased that a Framework Convention on Climate Change has now been agreed for signature in Rio.

Under the convention, developed countries will be committed to taking measures aimed at returning emissions of CO₂ and other greenhouse gases to 1990 levels by the year 2000.

The UK announced on 30th April that, provided other countries take similar action, it is ready to return CO₂ emissions to 1990 levels by 2000, rather than by 2005, as previously announced. To achieve the conditional target, UK measures in the short to medium term include increased energy efficiency, switching to less polluting fuels for electricity generation and more renewable energy. In the longer term, we accept that energy prices will have to rise by taxation or other means.

As my noble friend Lord Mersey pointed out, the energy needs of developing countries are rising, reflecting population growth and economic development. It is essential that these are met in an environmentally sustainable fashion through the responsible use of all economic energy resources. This represents an enormous global challenge. Far too many countries, both in the developed and developing world, subsidise or otherwise manipulate energy prices for social or other policy reasons. That encourages wasteful use of energy.

However, I am pleased to note that there are signs throughout the world community of a much greater understanding of the role energy markets play, particularly of pricing, in the production and consumption of energy. This was seen, for example, in the conference organised by the International Energy Agency in Paris earlier this year.

Meeting the world's rising needs for energy in an environmentally sustainable fashion has been one of the major underlying themes in the deliberations of the Preparatory Committee for the Earth Summit taking place this week in Rio and in the negotiation of the Framework Convention on Climate Change. In those and other contexts, some have argued that sustainable energy development requires agreement by governments on global energy strategies which they would then impose on their economies.

I have already indicated that such policies did not work in the UK and the common experience of top-down command and control strategies the world over is that they do not succeed. At best, they lead to gross inefficiency and mis-allocation of resources and at worst they directly lead to the tragic economic collapses we have witnessed, for example, in Eastern Europe and the former Soviet Union.

Indeed, it is highly relevant to record the comment of a representative of the Russian Federation at one of the Rio Preparatory Committee meetings during a discussion of this approach. He observed that his country was emerging from a 70-year experiment in centralised state planning which had demonstrated beyond doubt that such an approach led to economic and environmental disaster. That is why his country and many others are eager to convert as quickly as practicable to market-based economies.

Accordingly, the market operating within an effective framework of arrangements to safeguard health, safety and the environment is widely and increasingly accepted as the most effective and efficient mechanism for meeting world energy needs. The pricing of energy at its full cost, together with improvements in energy efficiency, is the key to ensuring sustainable energy development and consumption. These issues are vital and much has been done to improve the general understanding of the problems and the role of markets. We owe it to ourselves and future generations to build on international co-operation and understanding, to ensure that all countries in both the developed and the developing world use energy resources efficiently and responsibly.

My noble friend Lord Skelmersdale expressed sympathy for me at the range of topics that would be covered in today's debate. The great range of experience and knowledge of noble Lords did not prove him wrong. My noble friends Lord Wade of Chorlton and Lord HolmPatrick drew attention to the fact that biofuels offer a particularly attractive response to heightened environmental concern. There can be a net benefit to the local environment from waste disposal and alternative farming and forestry practices which provide a source of renewable energy.

In addition, in common with all renewables, global and regional environmental impacts are reduced when biofuels displace fossil fuels. If, simultaneously, it helps the rural economy, for which my noble friend Lord Wade has continuing anxiety, it will be a bonus.

The use of crops as fuel is an important area. We agree that there is a significant future potential for the use of willow by short rotation coppicing. The Government have extensive research and development programmes involving trial plantations and harvesting. The Forestry Commission has introduced grant aid, through its woodland grant scheme, to encourage planting. Several noble Lords raised important points about this.

The question of combined heat and power was raised by my noble friend Lord Wade of Chorlton and, with much skill, by my noble friend Lord Mersey. I agree that there is significant potential for combined heat and power and community heating to be applied to domestic dwellings in urban areas. Although progress is slow at present, I am nevertheless encouraged by developments in this field. There are now large, established schemes running, for example, in Nottingham and Sheffield. In addition, there are medium-scale community heating schemes and a number of smaller schemes in residential developments such as sheltered housing, using small-scale combined heat and power units. Like my noble friend Lord Wade, I should like to see our skills sold abroad.

I must congratulate my noble friend Lord Mersey on drawing attention to a Lloyd's problem, to which there is an effective and welcome solution. I wonder whether he has considered that there could be a possible market opportunity for combined cooling plants not too far away from this Chamber. In talking about DRAX, my noble friend illustrated the difficulty of environmental decisions and how there will never be simple solutions.

We were fortunate to have a major contribution from my noble friend Lord Lindsay who brought much knowledge to the debate, for which we are grateful. I am pleased that the future of the Renewable Energy Advisory Group is currently under consideration by Ministers. I acknowledge the considerable role that Mr. Moynihan played in setting it up and keeping a focus on it.

The question of the 1998 removal of the levy for renewables was also raised by my noble friends. Again I am pleased to say that the Government are in discussion with the European Commission with a view to making any future renewables orders under the non-fossil fuel obligation extend beyond 1998.

The Government's policy on renewables is to stimulate their development and application wherever they have the prospect of being economically viable and environmentally acceptable by research, development and demonstration programmes removing barriers to their deployment and providing an initial guaranteed market via the non-fossil fuel obligation. Today noble Lords made clear how important in their minds that was.

I was interested to hear my noble friend say that wind farms offered small firm growth potential in the tourist market. I have seen the one at British Nuclear Fuels which has generated considerable income in the area. That byproduct is perhaps not always mentioned.

Several speakers have touched on clean coal technology. The Government recognise the importance of the development of this technology and careful consideration will be given to it in the context of privatisation. The department is providing £170,000 to enable a working party to examine what needs to be done to take the Topping Cycle to the next stage of development.

My noble friend Lord Shrewsbury correctly identified the fact that the coal industry can look forward to privatisation. The Government's privatisation policy stems from the belief that business flourishes and provides the best service to customers where management is free to manage without interference in commercial matters from government.

Both my noble friends Lord Skelmersdale and Lord Shrewsbury touched on the matter of methane generation from waste. I agree with them that there is potential both in the UK and overseas to use methane from landfill sites and from farm waste as a fuel. I am pleased to point out that the UK's use of landfill gas is second only to that of the USA. There are 37 commercial plants operating and many more are expected to come on stream as a result of the non-fossil fuel obligation.

My noble friend Lord Shrewsbury also asked about the relaxing of the regulations concerning the tonnage of coal taken from opencast sites. Those of us with Midlands connections have seen the prosperity that that process can bring to an area. The relaxing of the regulations will be considered in the context of the main privatisation Bill on the coal industry to be introduced later this Session.

I realise that some noble Lords are concerned about the Energy Select Committee. That is a matter for the Leader of the House in another place but I understand that it is under consideration. My noble friend Lord Skelmersdale emphasised the need for cheap energy. He assessed its importance correctly as being equal to the need for cheap food. Cheap energy is a prime factor in nations achieving a worthwhile quality of life. My noble friend said it was fashionable for Ministers to tour the world looking at examples of good practice. I should point out to my noble friend that Ministers involved with small firms seem to tour the UK. Wolverhampton and Rotherham are towns that loom large in their tours. I shall take pleasure in drawing to the attention of my right honourable friend the need to look at some of the mistakes that have occurred in this area and some of the examples of bad practice in the United States. Attention has been drawn to that bad practice.

The noble Lord, Lord Addington, drew attention to the need for conservation. That is absolutely clear. Conservation is an aspect of this matter where solutions can be found that offer the least number of disadvantages. In terms of the conservation of energy the problem of risk benefit is easier to solve. I hope the noble Lord will be pleased with the new energy saving trust that my right honourable friend at the Department of the Environment launched last month. The noble Lord also drew attention to the problems that the car creates in terms of energy conservation and to the difficulties that will arise as regards drawing up cost benefit formulae in that area. The noble Lord rightly pointed out the necessity for cultural change as regards the attitude towards the motor car.

The noble Lord, Lord Donoughue, mentioned the international aspect of atmospheric pollution. This is obviously a global issue. The developing world's emissions of carbon dioxide are growing and will continue to do so. It is important to note that the UK's emissions of carbon dioxide are less than 3 per cent. of the world total. We agree that co-operation in technology has a key role to play in promoting sustainable development in all parts of the world. It is sometimes forgotten that a solution to environmental problems will have to be provided through technology and engineering. Our education system must consider that issue.

We have had a wide-ranging debate. I hope I have not missed too many of the points that were made. However, if I have done so, I shall be happy to consider them outside the Chamber. I am grateful to those who have participated in the debate. I hope that when he reads this debate, the noble Viscount, Lord Hanworth, will be delighted with the contributions that have been made. I thank the noble Viscount in his absence for having given us the opportunity to draw attention to a responsibility that we all have as regards protecting our assets for future generations.

7.5 p.m.

Lord Tordoff

My Lords, I am grateful to the noble Baroness for that wind-up speech. I fear that I have no further news to give to the House about the noble Viscount, Lord Hanworth, but clearly he has had an accident or is feeling indisposed and has been detained somewhere. I noticed that the noble Lord, Lord Colwyn, who is about to speak on his Unstarred Question was not in his place, and, realising that the debate could have been allowed to last for another 55 minutes, I made a few notes, most of which I shall not now use.

I hope the House will permit me to say a few words on energy, as it is a subject that is close to my heart, having been associated with the petro-chemical industry, and therefore indirectly with the energy industry. It is my view that fossil fuels should be used for making chemicals and should not be used as a form of energy. That is a basic tenet that I hold.

It is quite clear that fossil fuels, however great a quantity may be left in the ground, are finite. For the sake if not of our children then of our grandchildren and great-grandchildren, we must ensure that at some stage in the future when fossil fuels begin to run out there will be alternatives available so our successors may sustain their lifestyle.

I regret that for obvious reasons I was not able to be present during the whole of the debate. However, I noted a few remarks that were made. If for no other reason than being able to hear the maiden speech of the noble Lord, Lord HolmPatrick, on the subject of wind energy, I was glad I was able to get this debate under way. The noble Lord's speech was extremely interesting.

I am sorry that I missed the speech of the noble Lord, Lord Skelmersdale, as I understand that he said something about the developing world. The Minister mentioned coppicing, which is obviously an important aspect of the third world's production of wood fuel. We should not forget the need for improved intermediate technology to make sure that the wood which is being burnt in the third world is used efficiently. One of the most damaging results from an environmental point of view of third world countries' use of wood as a fuel is the deforestation of even marginal scrub land, as that can lead to soil erosion and all kinds of other problems. This is a complex subject and it ranges over the whole area of fossil fuels, nuclear fuel and various kinds of replaceable forms of energy. The subject also covers the whole area of intermediate technology.

I was interested to hear the remarks of the noble Viscount, Lord Mersey, as regards Lloyd's. The noble Baroness has stolen the only joke about Lloyd's that I had in my book but I must say that the way this House is ventilated, or rather not ventilated, being hot in summer and cold in winter, is a matter that the Science Research Council or some other body could look into. I am quite sure there is a resource here, even if it is only the kind of hot air that I am turning out at the moment.

I am grateful to everyone who has taken part in this debate. As the noble Baroness said, I am sure that, when my noble friend reads this debate, he too will be grateful to those who have taken part in it. On his behalf I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.