HL Deb 04 November 1998 vol 594 cc268-70

2.53 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

What action they are taking to secure the future of the coal industry.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, the Government inherited an electricity market that was badly distorted and are pursuing a reform programme to create a level playing field for all fuels including coal. In the meantime, the security and diversity of supply provided by coal will be guaranteed by a stricter consents policy on new gas-fired power stations.

We are also working with our European colleagues to minimise the distortions caused by state aid to the coal-mining sector in Europe. In particular, we will seek to ensure that the existing state aid rules are strictly applied. We have already had some success here in the case of graded anthracite.

Lord Dormand of Easington

My Lords, the recent decision to continue restrictions on the building of gas-fired power stations is very much to be welcomed. However, will my noble friend say when the changes he mentioned in the working of the wholesale electricity supply, commonly known as the pool, are likely to come into operation? They are a matter of some urgency. Is he further aware that the industry needs longer and larger contracts with the generators if it is to be sustained? Finally, does he agree that if there were an increase in manufacturing industry productivity similar to as that in the coal industry, the country would be in a better state?

Lord Sainsbury of Turville

My Lords, I believe that the new trading arrangements will be completed by April 2000. That is the time we are planning for. We shall depend on the Director-General of Electricity Supply to advise us as to when those arrangements are complete and when consents on the gas-fired industry are no longer necessary. Regarding sustainability, when that point is reached, we shall be able to change the arrangements. I agree that there have been major improvements in productivity. If they continue, they will help the coal industry enormously in obtaining the long-term supply contracts referred to.

Lord Ironside

My Lords, if coal is still to be used as a primary fuel in power stations, what steps are the Government taking to assist with the development of fluidised bed combustion to produce better warming, heating, burning and calorific exchange?

Lord Sainsbury of Turville

My Lords, we are pursuing new technologies in those fields. We are totally supportive of combined heat and power systems, which play a major part in terms of energy efficiency.

Lord Mason of Barnsley

My Lords, is my noble friend aware that, if we create a level playing field for British coal, we could cut back on the subsidised German coal imports; stop buying French electricity; reduce the 12 to 14 million tonnes of cheap coal imports; reduce open-cast coal-mining; and stop the dash for gas? What has he to say about that?

Lord Sainsbury of Turville

My Lords, there are a number of different categories here. Our aim is to create a market where there can be true competition. Where that does not exist, as in the case of German coal, we are working with our colleagues in Europe to make certain that action is taken to reduce the subsidies.

Lord Ezra

My Lords, following on the question raised about new coal technologies, will the noble Lord indicate what special assistance or support the Government will provide for the creation of demonstration plants in clean coal technology? Does he agree that the new clean coal processes which are so important for the environment are not being developed sufficiently fast, in spite of demand not only in the UK but also abroad?

Lord Sainsbury of Turville

My Lords, a new DTI clean coal research programme is being initiated. It will act as a focus for collaboration with industry and academia. It will enable the UK to maintain and develop its know-how in clean coal technologies. It will also help UK industry to attain a share of the growing market in these new technologies. I was recently in China, where we held meetings with the Chinese government and signed an agreement to enable them to work with British industry on the new technologies.

Lord Hardy of Wath

My Lords, I welcome the more constructive approach adopted by Her Majesty's Government and look forward to further progress. However, will my noble friend confirm that it is the Government's intention that the remaining British deep-mine industry will continue to be the safest in the world? Will he also confirm that the Government will not shrink from amending the current regulations if that seems desirable?

Lord Sainsbury of Turville

My Lords, our aim is to create a competitive market. Within that, we shall make certain that safety regulations are maintained and amended if necessary.

Earl Attlee

My Lords, even if the Kyoto targets are met, how will the Minister arrest the inevitable rise in emissions consequent upon the eventual retirement of the nuclear power stations by about 2020, and how will coal help the situation?

Lord Sainsbury of Turville

My Lords, the new policy will not affect the UK's capacity to reach its Kyoto target of a reduction in emissions of greenhouse gases averaging 12.5 per cent. between 2008 and 2012 compared with emissions in 1990. To the extent that new gas-fired stations eventually come on stream, this will aid the situation and make it easier to reach the targets.

Lord Lofthouse

My Lords, is my noble friend aware that on the sale of the electricity industry £1 billion was allocated to PowerGen for that company to produce a desulphurisation plant at Ferrybridge power station? That plant has never been produced. What has happened to the £1 billion?

Lord Sainsbury of Turville

My Lords, United Kingdom sulphur emissions are continuing to fall rapidly beyond what our international obligations strictly require. We are encouraging generators to run flue gas desulphurisation stations ahead of non-FGD stations. We have made clear that we believe that all major generators should have at least one FGD station. Eastern has announced plans to fit FGD at West Bourton.