HL Deb 24 July 2001 vol 626 cc1843-5

11.42 a.m.

Lord Jenkin of Rodingasked Her Majesty's Government:

Whether they intend to introduce legislation to give a specific exemption from the climate change levy for coal-mine methane used to generate electricity for distribution on the National Grid.

Lord McIntosh of Haringey

My Lords, for both environmental and commercial reasons, the Government support the utilisation of coal-mine methane for electricity generation and are currently examining a number of ways in which assistance can be given to the industry. We are at present discussing the treatment under the climate change levy of electricity generated from coal-mine methane with the Association of Coal Mine Methane Operators and we have asked that they provide further details of the case for an exemption.

Lord Jenkin of Roding

My Lords, the Government have accepted the fact, and the Minister has repeated it, that coal-mine methane is a dangerous gas; that it is 20 times more damaging to the environment than CO2, with which the recent Kyoto conference dealt; and that if the industry is to exploit the gas, trap it and use it, it must be given practical encouragement. Why is it taking so long for the Government to make up their mind how to give that encouragement?

Lord McIntosh of Haringey

My Lords, it is not a question of the Government making up their mind how to give that encouragement. There are certain constraints. Strictly speaking, coal-mine methane is not renewable and therefore it does not benefit from inclusion under the renewables directive. There is always the danger that help for coal-mine methane being used for electricity generation will be categorised as state aid. Although we hope to overcome that danger, we cannot be sure of doing so.

Those are not simple problems. It is clear that coal-mine methane is a good product. It would be unfortunate, to say the least, if the non-renewable tag were to hold it back. However, we must operate within the law.

Lord Hardy of Wath

My Lords, my noble friend appears to be telling us that the Government are moving manfully towards consistency and doing so to the advantage of the environment and the economy. Is it not particularly important that the coal-field areas are allowed to enjoy the advantage which will follow a favourable decision and will that not greatly help to achieve the Kyoto targets, which need more serious consideration?

Lord McIntosh of Haringey

My Lords, as regards the coal-mining areas, coal-mine methane sold directly to end users as burner tip fuel is already exempt from the climate change levy. However, that does not mean that we need not seek wider exemption. We are looking, for example, at the Community guidelines on state aid for environmental protection to see whether it is a way around the problem that we face.

Lord Ezra

My Lords, following the question asked by the noble Lord, Lord Hardy of Wath., in regard to coal-field areas, while the various issues to which the Minister has referred are being sorted out, could not additional financial assistance be put into the coal-field areas to resolve the problem relating to this issue? That would at one stroke provide additional employment for unemployed mineworkers and contribute to the environment.

Lord McIntosh of Haringey

My Lords, the noble Lord, Lord Ezra, has rightly opened up the Question; from the difficulties relating to coal-mine methane to the wider issue of helping former coal-mining areas. I agree with everything he says and a wide range of programmes is directed towards that objective. A particular environmental problem is that if we do not tap the abandoned mines for coal-mine methane it will escape into the atmosphere. As the noble Lord, Lord Jenkin, said, that is 21 times more dangerous than the release of CO2.

Baroness Miller of Hendon

My Lords, does the Minister recall that when I drew attention to the German legislation which provided for the beneficial use of this potent gas in electricity production his noble friend Lord Sainsbury described what the Germans were doing as illogical and stupid?

Leaving aside the question of whether that gracious reply prompted the Foreign Office to invite his noble friend to join the Diplomatic Service, will the Minister say what response he had from his German counterpart and what efforts his department has made to monitor the economic and ecological benefits of what has taken place in Germany? The noble Lord shakes his head. I am very surprised because it is a very simple question.

Lord McIntosh of Haringey

My Lords, it is a very complicated question because the noble Baroness, Lady Miller, is asking me to say what reply has been received from Germany to a statement apparently made in this House. I do not know the answer to that question and I do not know how I would every know it.

The route which the German Government found to give exemption for coal-mine methane is not self-evidently a route which is open to us. However, we are looking for every option that can be made available to us.

Lord Swinfen

My Lords, if methane gathered from capped landfill sites is exempt from the levy and, as with coal, it is not strictly renewable, is the coal-mine methane not exempt, too?

Lord McIntosh of Haringey

My Lords, the sad answer is that it is strictly renewable because landfill sites continue to be filled. As we produce more rubbish we continue to create landfill sites and the methane which escapes is renewable. It is a matter of definition and we cannot get around it. Coal-mine methane comes from fossil fuels accumulated over millions of years. There is a real difference between the two, but it should not be a difference that affects the tax treatment of coal-mine methane.