Coal: UK Stocks (Hansard, 12 February 1997)

§ The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)
My Lords, we do not expect the United Kingdom to suffer a shortage of coal in the foreseeable future.

§ Lord Dormand of Easington
My Lords, is the Minister aware that coal stocks have fallen from 47.2 million tonnes in 1992 to 15 million tonnes in 1996 and that at the same time last year the demand for electricity rose by 7 per cent. as against the expected rise of 2 per cent.? Is he aware further that when there is a 1 per cent. rise in the demand for electricity, a further million tonnes of coal are required? Is not the ending of preferential treatment for nuclear power and gas long overdue, particularly as the coal industry is the cheapest provider of energy?

§ Lord Fraser of Carmyllie
My Lords, I am not sure that I can agree with the noble Lord's last proposition. However, the situation is that there is a diverse range of fuels used to generate electricity. Increasingly the situation has been that gas is used more than coal. I cannot contradict the exact figures which the noble Lord has given. He is correct that only a very small stock of coal is kept at power stations; namely, something like 2.5 million tonnes. But in our view, that is an adequate defence against the disruption of supplies, given the wide variety of fuels which are now available.
As the noble Lord will appreciate, such has been the performance of the electricity generating industry that in the course of last month there was a peak demand of all time and there was still something like 13 per cent. of spare capacity.

§ Lord Tebbit
My Lords, does not my noble and learned friend agree that the fall in coal stocks has more to do with the improvement in industrial relations than any other factor?

§ Lord Fraser of Carmyllie
My Lords, I am not surprised that my noble friend should make that observation. Certainly, the coal stocks have reduced for that reason. I am sure that my noble friend will recall that during the course of last year we discovered that in 1995, for the first year on record, no working days were lost through strike action in the coalmining industry. I have no doubt that everyone welcomes that. Indeed, that is one of the reasons that it is no longer necessary to keep excessively large stocks of coal.

§ Lord Ezra
My Lords, is the noble and learned Lord aware that at present there is a shortage of British-produced coal in that 8 million tonnes of power station coal are being imported? Is he further aware that according to information which I have received, had the capacity existed, we could have replaced that tonnage, thus saving some £200 million of foreign exchange and providing some 2,000 extra jobs?

§ Lord Fraser of Carmyllie
My Lords, as I am sure the noble Lord knows from his long experience in the industry, of the coal which is imported into the United Kingdom, some half is in respect of coal for which we either do not have any capacity or certainly do not have an adequate quantity. The other half is imported essentially because coal which is imported is sold to generators and others at a price cheaper than coal can be produced in this country. I agree with the noble Lord 244 that if coal were to be subsidised, it would be possible to provide it all in the United Kingdom. But I am far from convinced that that is an appropriate way forward for our generating industry.

§ Lord Ezra
My Lords, the coal that I was talking about is coal that is easily substitutable. There are 7 million tonnes of coking coal imported to which I did not refer. I was not talking about subsidised coal. Is the Minister aware that, had the extra capacity been there and bearing in mind our present experience of the cost of British coal, it could easily have been replaced?

§ Lord Fraser of Carmyllie
My Lords, I have indicated to the noble Lord what I understand to be the position. The total amount of coal imports is either in grades or types, including anthracite for which we have insufficient sources of supply.

§ The Earl of Lauderdale
My Lords, will my noble friend the Minister agree that the industrial use of coal is bedeviled by pollution problems?

§ Lord Fraser of Carmyllie
Yes, my Lords; it has been, although I am sure that my noble friend now appreciates that very substantial improvements have been made in terms of washing out the gases which are emitted from power stations fired by coal. What was a problem in the past has been eliminated in large measure, although it clearly could be improved.

§ Lord Dubs
My Lords, does the Minister agree that a sensible fuel policy should be based not predominantly on one source of energy but on a number of sources of different fuels? That being the case, would the noble and learned Lord care to comment on the proposition that imports of orimulsion and pet coke, which themselves are the dirty fuels in use, represent a threat to the coal industry which would not be desirable?

§ Lord Fraser of Carmyllie
My Lords, I certainly agree with the noble Lord's opening proposition that there should be a variety of fuels which can be used to generate electricity. However, as far as concerns orimulsion, I am bound to tell the noble Lord that there is an application by a generating company in this country to use orimulsion in Pembrokeshire. That is a matter which is presently before my department for consideration. Therefore, in those circumstances, I am sure that the noble Lord will appreciate that no comment from me would be appropriate at present.

§ Lord Dormand of Easington
My Lords, the Minister did not refer to that part of my supplementary question in which I said that both nuclear power and gas receive what in effect is a subsidy. It is no wonder that the electricity generating industry is using more gas. We all know about the "dash for gas" which this Government encouraged. Surely the Minister agrees that from time to time—and certainly within the past two years—there have been very critical periods when electricity supply has almost not come about because of the lack of power. That is why we are staying on coal.
245 Is it not ludicrous to be importing 15 million tonnes of coal, which is much more than the special kind of coal to which the Minister referred?

§ Lord Fraser of Carmyllie
My Lords, we could have a long discussion about the extent to which nuclear power is being subsidised in historical terms. However, so far as concerns gas, I do not accept from the noble Lord that it is in any sense subsidised at present. It is a fuel which is very cheap at the moment; it is very available and very efficient in the way that it is used for generating purposes; and it also has very significant advantages in environmental terms. For all those reasons, it seems to me to be appropriate that we should be using gas to generate electricity; indeed, the noble Lord's noble friend on the Opposition Front Bench indicated that it would be desirable to have a variety of fuels used for the purpose.

§ Lord Brougham and Vaux
My Lords, although I do not believe everything that I read in newspaper reports, has my noble friend the Minister read a recent press report about heavily subsidised German coal coming into the United Kingdom? If he has, can he tell the House what the Government are doing about it?

§ Lord Fraser of Carmyllie
My Lords, if my noble friend saw such press reports then that is correct. We are aware of allegations that German coal producers have been dumping subsidised anthracite, especially in the North East of England. That is a matter which this Government have brought to the attention of the European Commission.

§ Lord Varley
My Lords, now that the private companies have depleted the very large stocks of coal that they inherited following privatisation, are the Government aware that there is much anecdotal evidence that essential development work is not now taking place in the deep mines that remain and that we could be in a very serious position in two years' time? Are the Government indifferent to the situation; indeed, do they know about it? Finally, has the Coal Authority any role to play in the matter?

§ Lord Fraser of Carmyllie
My Lords, I have heard some allegations that that type of developmental work is not being undertaken. However, I do not know how sound such allegations are. I certainly have no broad indication that significant problems are likely to emerge over the next few years. If there is a problem confronting the coal industry, it is that it must be in a competitive position over the next few years when, undoubtedly, there will be a number of other options for generating electricity following the increased use of gas and the combined cycle gas turbines which are very efficient in every possible way.

§ Lord Monkswell
My Lords, if the private owners of the coal industry run down that industry and do not invest in it to such an extent that in a few years' time this country runs out of power generating capacity and 246 ability, will those people be sent to gaol for effectively destroying a national asset which is important for our future survival?

§ Lord Fraser of Carmyllie
My Lords, I am bound to say that I believe the private owners of coal are somewhat wiser than the noble Lord. They have no purpose in deliberately running down an industry at a loss. They are in business to ensure that the industry is efficiently and competitively run. Although production levels have been dropping, those companies that are in private hands are running at a profit at present. That is the best safeguard of their long-term future.