§ 8.39 p.m.
§ Lord Hardy of Wath rose to ask Her Majesty's Government what they are doing to develop clean coal technology and to maintain the mining engineering industry within the United Kingdom.
§ The noble Lord said: My Lords, the matters to be raised in the debate this evening are of considerable significance and relevance. They touch on the White Paper. I recognise that, in that document, the Government took the long view and offered not merely hope but a degree of intention. Some refinement of short-term policy is required, especially if the Government are to fulfil their aspirations with regard to the economic supply of energy and to serve the 316 environmental cause. Some decisions will need to be made relatively soon, and I hope that I shall be able to mention them.
§ The White Paper confirmed that the United Kingdom would see a marked reduction in carbon emissions by 2050. No one could argue against that; planetary survival may make it essential. However, that view has led to the widespread suspicion that coal combustion and coal-mining will have to end in these islands. That would be unwise and unnecessary. Technological advance has made that clear. Coal can be burnt cleanly.
§ There are two current approaches that should be pursued. Existing power stations could be retro-fitted with the relevant equipment. High-temperature, super-critical boilers can be used, offering thermal efficiencies at least 20 per cent above those currently achieved. A more modern plant with such equipment could save considerable emissions of carbon and save a good many hundreds of thousands of tonnes for emissions trading.
§ The other approach is, perhaps, the more significant—modern coal gasification. It would certainly comply with the Kyoto aims, and it would produce hydrogen, which will be an important fuel source, and it could capture the carbon emission. If CO2 storage could proceed rapidly, such developments would be extremely attractive. The White Paper says that the future of coal-fired electricity generation depends on clean coal technology. Clean coal technology now allows that condition to be met.
§ In recent weeks, the United States Government, despite all their other interests and concerns, have provided 2 billion dollars for such a plant. There is another plant in Florida, run, I think, by Texaco. There is a demonstration plant in the Netherlands. We could go ahead rapidly here. I hesitate to give the name of the place because my pronunciation of Welsh names is not particularly good. It has an indecipherable name, and I am not insulting anyone present by saying that except my noble friend. I shall not try to say the name. It is near Seven Sisters, and it would burn anthracite and petrocoke that had already been cleaned. That plant could serve the Principality well.
§ There is a very relevant project in Yorkshire that could proceed. The noble Lord, Lord Ezra, will recall Hatfield colliery. He will have visited it during his long tenure of the chairmanship of the Coal Board. Hatfield colliery can now expect a substantial future because, beside it, there will be—there could be—two such plants. The first already has full planning permission, and the second has outline permission. Those two plants could go ahead without delay, and they would make a substantial contribution to our energy requirements. They would capture the CO2. They would produce hydrogen, and the CO2 could be stored readily, as the plants are not that far from the North Sea.
§ I note that Her Majesty's Government have some anxiety about the legal position with regard to carbon storage. It does not seem to worry the Norwegians, who already do it. In any case, I do not believe that 317 since it is being stored sub-sea, there would be any international objection to that sensible and profoundly desirable development.
§ Coal has been mined in South Yorkshire for many centuries. The first recorded evidence of mining was in the year 1296 in what was at that time the parish of Wath-upon-Dearne. There are very few collieries in the county now but large numbers have existed. Indeed, there were 12 collieries in my constituency when I was elected to the Commons in 1970. There were another 25 within a three mile radius of the constituency boundary—I believe, just one is left now.
§ Therefore, very few people work in the industry today. However, there is an almost tribal interest in it because it was a dominant part of our economy for many generations. There is an increasing awareness that although the pits in our area have largely gone, coke still has a considerable future. The same argument applies to coal-mine methane. At the weekend, there was an interesting television programme which attracted considerable interest in my region.
§ Methane is a noxious gas. Over the years it must have killed thousands of people—or, perhaps, scores of thousands of people—in the mining industry. So those who have any interest in mining feel very resentful that still it is allowed to enter the atmosphere when it could be sensibly transformed into electricity—sites are largely quite close to the national grid. It could therefore make a good contribution.
§ There is an overwhelming anxiety about gases like carbon dioxide, but methane is 22 times more noxious than the normal greenhouse gases that we tend to be excited about. The Germans, perhaps more thriftily, take a much more advanced view.
§ A number of us—the noble Lords, Lord Ezra and Lord Oxburgh and my noble friends Lord Dormand and Lord Jenkins—have met Ministers a number of times during the past two years. We have had a courteous and interested reception, but action is still not taken. Those of us who live in the coal fields object to the poison from beneath our feet poisoning people some distance away. It is unnecessary; it could be turned to very useful purpose.
§ There is a school of thought that coal mining should cease. But that is a foolish proposition, partly because if it ceased in Britain, that reduction would have very little effect on the total amount of mining on this planet. India, China and the United States would continue to mine vast quantities of coal and the reduction of our contribution would scarcely be noticed in a planetary sense.
§ However, if mining did cease, the mining engineering industry would not have a home base. Given that we have invested a lot of money in clean coal technology, that would be throwing away the investment we have made. It would also be foolish for another reason. In the 13 collieries currently operated by UK Coal, there were no recorded major or significant accidents in o seven of those collieries in February. The total rate for injury accidents in the mining industry in February was 2.5 per 100,000 man 318 shifts. That is a situation which would not have been credible 50 years ago when there was a considerable toll of life and limb in the industry.
§ It is not only safety that has been served, productivity has soared. Of the 16 coal-faces operated by UK Coal in February, seven produced over 5,000 tonnes a day. Two faces—Kellingley and Howarth—produced over 7,000 tonnes a day, and February was not the best of the past 12 months.
§ At the same time, development work has proceeded. At seven of the collieries in UK Coal, which is the majority of our collieries in Britain, the rate of advance in development work exceeded the target by over 50 per cent. Those achievements are not entirely unexpected. The noble Lord, Lord Ezra, and our late and lamented colleague, Lord Haslam, were well aware, during their chairmanships of the industry, that productivity was gradually, but definitely and remorselessly, extending. We do not have the thin seams that my noble friend Lord Lofthouse would work in when he was a young man.
§ But the Government have been wrong and they have been wrong before. I shall explain another reason why I think that error should be accepted as a possibility. When the industry was privatised, the government of the day produced a prospectus which listed the coal reserves for each colliery. Of the collieries now in the ownership of UK Coal, the prospectus listed coal reserves of 26.1 million tonnes. Since 1994, a great deal of mining has gone on and those collieries may already have produced 26.1 million tonnes of coal, but the reserves today at those collieries stand at 63 million tonnes. That needs some explanation, and the explanation is quite simple.
§ In the 1980s I had an opportunity to visit a huge mining engineering exhibition held at the National Exhibition Centre in Birmingham. I attended a lunch there, which was addressed by Mr McGregor. In his speech, Mr McGregor made a very important announcement, saying that there were no coal reserves in the United Kingdom unless they could be profitably mined immediately. Some people clapped and gave him a standing ovation. I remained seated because I regarded that view as silly then and idiotic today. It is an idiotic view because at the time when Mr McGregor spoke, the industry was still working thin seams and we had not yet seen the great technological advances that have now been made. The cost of producing coal then stood at around 1.45p per gigajoule. We are now producing coal in the United Kingdom for 1.05p per gigajoule, which offers a very considerable bargain to industry and domestic consumers if we link that high productivity and use those reserves in a clean way—and now we can.
§ At the same time, in the White Paper the Government recognise clearly that CHP has a role to play; it should have a role. The Government want to see 10,000 CHP plants in operation, but the present target is only 5,000. I accept that many of them are not using coal, but if coal is mined cleanly and the cost remains sensible, coal could increase its share. One hopes that the Government's intention to secure a national system of 10,000 CHP plants is realised.319
§ But the Government flirts with renewables. The recently published Select Committee report stated that the Government have spent £20,000 in support of clean coal technology, but £20 million on renewables. Some of those renewable sources would be ridiculously expensive. Some of them are not entirely acceptable. I worry about wind power. If we have to rely to any great extent on wind power, we shall need to retain back-up energy supplies for those days when the wind does not blow strongly and the windmill sails do not turn, which would be extremely costly.
§ When we were discussing the Utilities Bill a day or two ago, my noble friend may recall that I expressed a particular point. In the coal-fields, we knew that the government of the day—not this Government—tried to force open-cast mining on to communities that did not want it. They did not want the noise, the disturbance and the general upheaval often associated with that form of mining. The local authorities did not want it because they had been elected by the communities that were resisting it. But those local authorities knew that if an application was rejected and the applicant appealed, the government would grant the appeal and it would cost the local authority for no good purpose. A few days ago I demanded—or courteously requested, I hope—that the Government should give an assurance that there would be no arm-twisting to force communities desperate to protect their landscape and environment to accept windmills; in effect, having them thrust on them. I made that point especially as wind power is an expensive option, given the requirement for back-up.
§ Other schemes have been considered, which also may not be terribly attractive. If coal were to be burnt dirtily and there were no alternatives, as a green supporter for many years, I would accept that wind power is necessary. But it is not necessary for us to take that route.
§ I turn to the argument about nuclear power. I do not suggest that it should never he operated. My fear is that it should never be allowed to fall into the hands of tyrants, of whom we still have quite a few about. I also recall visiting Chernobyl. I stood and looked at that monument of horror, and of courage, thinking of the people who went in after the explosion. They knew that they would die as a consequence. I travelled there and witnessed that horror. I then had to travel out through the deathlands surrounding it for a considerable distance. After that, I recognised the fact that, until we can solve the problem of storing nuclear waste, we cannot be certain about the technology—even though we know that the plants operating today are as safe as they can be.
§ I take the view that CHP is important and that the Government are to be commended for their commitment to it. But I also take the view—as I hope will the House—that we should get on with developing clean coal technology and modern gasification to guarantee a supply of energy which can be burnt cleanly.320
§ I trust that I have not exceeded my time. The list of speakers refers to 12 minutes, but a correct mathematical calculation suggests that 15 minutes is not unreasonable.
§ 8.55 p.m.
§ Lord Lofthouse of Pontefract
My Lords, I thank my noble friend Lord Hardy for introducing the debate. As I have sat here over the past 10 or 15 minutes, I have had a feeling of pleasurable nostalgia. For many years my noble friend and I sat together during similar debates in another place when we were lighting to maintain a reasonably sized coal industry. Unfortunately we were not very successful.
Before I come to the main contents of my speech, with the permission of the House I shall take the opportunity to pay tribute to my noble friend Lord Mason. On 14th April, my noble friend—a lad from the pits—will have completed 50 years' service in the House of Commons and the House of Lords.
I recall a time in 1968 when my noble friend Lord Mason was the Minister of Power. It is appropriate to mention this because in my speech I shall refer to the Drax power station and I know that my noble friend's influence at that time was instrumental in establishing Drax as a coal-fired power station. The miners were indebted to him then and they have been indebted to him ever since. I am certain that no other miner has represented his area—in my noble friend's case, the Barnsley coal field—in Parliament for 50 years. As a former miner myself, I have great pleasure in paying tribute to him.
Against the background of the energy White Paper that most clearly placed the environment at the heart of this country's energy policy, I wish to draw attention to one aspect of the electricity market which is, perversely, benefiting most those who pollute the atmosphere and penalising those who have invested to reduce harmful emissions.
Coal-fired generation currently contributes 32 per cent of the country's electricity supply, which uses some 51 million tonnes of coal a year. Of that, last year around 60 per cent was imported with the remainder, some 19 million tonnes, coming from British pits. A large proportion of this—some 7.3 million tonnes—was burnt at the Drax power station, the largest coal-fired plant in western Europe. I regret that the trend over the past few years has been one of increasing imports of coal against falling demand for British coal.
Aside from the issue of price, which I do not want to go into this evening, the other reason for the increasing switch from UK sources to abroad is the relatively high sulphur content of most British coal. On average, British coal has a higher sulphur content than imported coal; that has a sulphur content of 1 per cent or less, whereas currently available coal from the UK averages a sulphur content of between 1.8 and 1.9 per cent.
Of course, through burning lower sulphur imported coal, power stations are able to remain within their emission limits under the integrated pollution control regime, as in Part 1 of the Environmental Protection 321 Act 1990, whereas burning British coal may cause them to breach these limits. This also avoids coal-fired stations having to invest the large sums required to fit flue gas desulphurisation—known as FGD—plant.
Meanwhile, the two stations that have invested in FGD are well equipped to burn British coal through mitigating the SO2 emissions by some 90 per cent. The downside is that Drax has not only spent £680 million in fitting FGD plant, it has to meet the running costs of about £30 million a year. Your Lordships will recognise that this is obviously a major competitive disadvantage compared with all the other plants that have no abatement equipment and therefore do not need to meet these extra costs.
The perverse result of this is that production of coal burn is shifting from clean plants to dirtier ones. For example, the amount of coal burned at Drax has fallen from around 11 million tonnes per year in 1996 to some 7.3 million tonnes for 2002. Your Lordships will, I am sure, recognise that not only is more pollution being emitted into the atmosphere because of the increasing coal burn at unabated plant, but there is a real disincentive for the use of British coal.
Current market conditions, in particular the low market price for wholesale electricity, and the lack of more stringent emissions regulations, act as a distinct disincentive for other power plants to invest in expensive clean-up equipment such as FGD plant.
Giving the use of unabated plant a significant commercial advantage surely cannot be the intention of the Government's energy policy when so much importance has been attached to reducing harmful emissions. It seems somewhat illogical that plant with FGD is not used to its full extent, so ensuring the lowest possible emissions per gigawatt of power produced before output from unabated plants. Instead, I regret the reverse is happening, with load factors shifting from abated plant to unabated plant. It appears to me that the problem is that the current merit order for the running of power stations takes no account of environmental factors, and optimum efficiency is not being obtained. Unfortunately, and somewhat surprisingly, this issue did not even merit a mention in the White Paper.
I note that Ministers acknowledge in the White Paper that they should not seek to interfere with the market to obtain their objectives. Can it then be assumed that policy instruments such as the revised large combustion plant directive and other European directives, which complement well the White Paper's environmental aspirations, will be stringently and robustly applied with a view to achieving a running order that prioritises the utilisation of the cleanest and most efficient plant?
In this context, an area of concern is that the revised large combustion plant directive allows plant to opt out in exchange for a limit, in terms of operational hours, on their output. Such a choice would appear to be totally contrary to the Government's stated environmental objectives.
322 I cannot help but think that the opt-out regime, allowing plant 20,000 operational hours over eight years, is unnecessarily lenient and will have a significant negative environmental impact unless total emissions from those plants choosing to opt-out are restricted through a more stringent application of UK environmental regulations. I suggest to my noble friend the Minister that the effect of tougher environmental regulations should be a merit order of plant utilisation that means that the cleanest and most efficient plants are used first and used to maximum capacity. It is only through allowing such a running order that the market will signal and incentivise investment in clean coal technology.
Surely, it will be in the commercial interests of generators to invest in FGD plant with the result of considerable reductions in harmful emissions, a level playing field for producers and a greater chance for coal from UK pits to compete. To do nothing is to accept that SO2 emissions are higher than they need be, which is hardly the message that the Government want to send out.
In conclusion, one of the key objectives of the Government's energy policy, as outlined in the White Paper and as stated by the Minister in his reply to the recent debate on fuel supply, is security of supply. It will not be too many years before coal provides the largest indigenous source of primary energy material in the UK. To damage that supply in the short term by discouraging generators from burning British coal is not only short-sighted but reckless, if I dare use that word.
The International Energy Agency forecasts that some 38 per cent of the world's electricity will be generated from coal by 2020. As the White Paper acknowledges, here in the UK more efficient and environmentally friendly cleaner coal technologies have a major role to play in making the continued burning of coal acceptable to people and governments as they pursue policies in support of sustainable development. It is essential to ensure that coal-fired generation continues its important role in the country's energy mix. The onus is on the industry to continue to make it more environmentally friendly through investment in abatement plant as well as in other clean coal technologies.
I strongly suggest to my noble friend the Minister that the onus on the Government is not to penalise those who invest in abatement plant but to introduce new measures that will put the environment first and to continue to encourage research into clean coal technology.
§ 9.9 p.m.
§ Lord Ezra
My Lords, I should like to join in the appreciation expressed by the noble Lord, Lord Lofthouse of Pontefract, to the noble Lord, Lord Hardy of Wath, for introducing this debate.
The noble Lord, Lord Lofthouse, said that this was in some ways a nostalgic occasion. For those associated with the coal industry, any occasion for speaking about coal, with its great and turbulent 323 history, quickly becomes nostalgic. We have heard some memories from the two eminent speakers who came before me, about their experience of that industry.
I concur with the congratulatory remarks of the noble Lord, Lord Lofthouse, about the noble Lord, Lord Mason of Barnsley. I had the pleasure of working very closely with the noble Lord, Lord Mason, when he was Secretary of State for Energy. He undoubtedly made a big contribution to the coal industry at that time.
The White Paper, to which reference has properly been made, considers, among many other issues, the future of coal. At present, coal provides about a third of the fuel going into power stations. I can well remember when coal provided the whole of the energy supply to power stations, but now it is down to a third. But, on present trends, the prospect is that by the year 2020 it will virtually have been eliminated from power stations. At that stage, the supply of gas to power stations could amount to something like 90 per cent. That would be a serious development, bearing in mind that at that stage over 70 per cent of the gas would then have to be imported from distant and uncertain places.
So one way of mitigating this situation would be by making more progress than hitherto in the application of clean coal technologies. The White Paper makes it clear that there can only be a real future for coal if these technologies are developed. Now is the time to move ahead rapidly in that direction. Indeed, as the noble Lord, Lord Hardy, pointed out, there are already proven technologies. This is not a question of research and development; it is a question of applying technologies that already exist. In the shorter term, as he pointed out, coal generating plant could achieve CO2 emission reductions of 20 to 25 per cent by retrofitting advanced super-critical boiler and turbine systems, which are readily available.
Greater reductions could be achieved by the construction of integrated gasification combined cycle powers plants (IGCCs). As the noble Lord, Lord Hardy, pointed out, there are two plants awaiting the go-ahead. One is in Onllwyn, in South Wales, which he forbore from pronouncing—I hope that I have got the pronunciation roughly right, as I quite frequently visited the Principality in my time in the coal industry; the other is at Hatfield, near Doncaster.
The ultimate objective must be to link IGCC systems with carbon sequestration and storage, and using the carbon extracted for enhanced oil recovery—EOR, as it is now becoming known. The White Paper makes it clear that EOR could yield an additional 200 million tonnes or 1.5 billion barrels of oil from the North Sea over 20 years. At present, the production rate is about 130 million tonnes and diminishing, so this could be quite a big contribution to extending the oil reserves being extracted from the North Sea. The trouble is that, because of depleting oil reserves, the opportunity for enhanced oil recovery only exists for the short term. According to the White Paper, CO2 injection would need to start by the period 2006–2008. 324 If that is so, work has to be done urgently to construct a plant and get it into operation. We cannot waste time. To be fair to the Government, that urgency is recognised in the White Paper. A study has already started to look into the feasibility of proceeding with an EOR plant. That is to report by about August, with proposals as to how this could be proceeded with.
As the noble Lord, Lord Hardy, pointed out, in the United States they have moved ahead much faster than we have in this area. Recently, a most ambitious project was launched aiming at zero emissions from coal-fired plant. Zero emissions means that coal could be placed on the same basis as renewables. You cannot get below zero. It could be something quite remarkable. It is known as the FutureGen project. It would be of a 275 megawatt capacity (equivalent to a medium-sized power station) and cost 1 billion dollars (or £650 million), 80 per cent funded—I emphasise that—by the US Government. In the words of the American Secretary of Energy, that would,turn coal from an environmentally challenging energy service into an environmentally benign one".Is the UK participating in that project, either at governmental or commercial level?
In view of the developing prospect of energy import dependence for the first time in our history—we have never before been as likely to have to depend so much on imports as we will in the next 20 years—and in view of the substantial reserves of coal and of the technologies now available for minimising the environmental impact of coal use, there is a strong case for accelerating support for clean coal technology and ensuring that, at long last, one or more plants come on stream as soon as possible.
Among others, I have for many years been urging for a plant to come into operation in this country. We have been told that we are doing a great deal to export technological know-how in the combustion of coal and particularly of clean coal. However, unless we have a plant to demonstrate, the effect of seeking to export that technology will be minimised and people will go to the United States, to the Netherlands and to other countries where there are plants in operation.
I have heard rumours that the Government have in recent months been diverting resources away from work on clean coal technologies to renewables and other activities. I hope that the Minister will deny that and assure the House that more rather than fewer resources will be earmarked for clean coal technology and development.
As I pointed out, the White Paper makes it clear that we have to move fast to take advantage of enhanced oil recovery in the North Sea. That can be done through the injection of CO2 recovered from clean coal technologies. I conclude by asking the Minister whether he can confirm that it is the Government's firm objective to achieve those developments and to ensure that our abundant coal reserves can be exploited in the years ahead using the new technologies, thus reducing excessive dependence on energy imports.
§ 9.18 p.m.
§ Baroness Miller of Hendon
My Lords, I, too, thank the noble Lord, Lord Hardy of Wath, for introducing this important and interesting debate. I was also very pleased to hear the tribute from the noble Lord, Lord Lofthouse, to the noble Lord, Lord Mason, for his great contribution to the coal-mining industry.
Electricity is a most important component of our domestic and industrial life. In the past 50 years, the whole energy mix of this country has changed drastically. In 1950, to generate electricity we used 10.4 per cent crude oil and 89.5 per cent coal. By 2000, the figures changed dramatically: coal had sunk to just 32 per cent and gas had overtaken it as a primary source of power, comprising 43 per cent of the fuel employed in electricity generation. Of course the so-called "dash for gas" was understandable in the light of the vast reserves that became available to us from the North Sea and the fact that, if one has to burn a fossil fuel, gas is cleaner and safer than coal or oil. However, our dwindling North Sea supplies mean that we shall shortly become large-scale importers and that our reserves will run out within a decade. We will then become dependent on imports from places such as Algeria, the Sahara and Russia.
The adverse effect of that large-scale importation of gas on our balance of payments illustrates one reason why the noble Lord, Lord Hardy of Wath, has introduced this debate. We cannot put ourselves in a situation where we are too heavily dependent on any one source of generating electricity.
I quote from the Coal Authority's recent response to the consultation on energy supply:Diversity is not an end in itself, but just one of the possible means of enhancing security of supply".As other noble Lords have said, the Government have placed a great deal of emphasis on renewable sources, mostly wind power. But as I pointed out to your Lordships during the debate on the energy White Paper, to meet the Government's target for renewables by 2020, we would have to build a further 19,930 wind farms or, to put it another way, three a day. That is a most difficult target. But whether it is a target or an aspiration, a reliance on a projected 20 per cent supply of electricity from renewable sources by 2020 is something that we absolutely cannot rely on in our current projections.
Before I leave the subject of renewables I touch on one coal-based renewable source, coal-bed methane, in itself a potential pollutant unless properly treated, but the exploitation of which would add to energy supplies without adding direct costs to the consumer. The Coal Authority has had no approach from the Government on the prospects of using that resource. Perhaps the Minister will tell us when he replies to the debate what financial means and regulatory support are being contemplated for coal-bed methane as part of the drive to exploit renewable sources of power.
The simple fact is that, even if the Government were somehow able to reach their target of 10 per cent of our electricity supplies coming from renewable sources by 2010, that would not keep pace with the 1.5 per cent 326 per annum growth in electricity demand projected by the National Grid, let alone replace diminishing coal-fired capacity.
While mentioning diminishing capacity—which has to be replaced from somewhere—we cannot overlook the fact that our declining nuclear capacity is programmed to fall to almost nothing in the next 15 years.
Irrespective of the generation power source, we could still have temporary shortages of electricity. That would happen if we reduced our own generating capacity or allowed it to be degraded. It will especially happen if we fail to maintain an adequate margin of spare capacity because of the Government's dithering over the establishment of new power stations. Then we might have to rely on short-term imports of electricity. From where would we import it? We might import it from France, but I am not sure that we would want that.
Diverse but viable sources of fuel are essential. That brings me to the greater use of coal. As Aneurin Bevan pointed out in May 1945,this island is made mainly of coal".Because of the economics of coal-mining, today we import more coal than we produce. In 2001 we produced 32.1 million tonnes but imported 35.5 million tonnes. Paradoxically, it is cheaper to import coal from South Africa, Australia, Colombia or America than to dig it up from under our feet. Although coal, rightly, has a reputation as a dirty, highly polluting fuel, the abundant reserves from all around the world make the supply secure. It is safe and stable to transport, store and use. But, above all, using modern technologies coal can be burnt cleanly. That is the nub of this present important debate.
If we are to have a secure, multi-sourced supply of electricity, we cannot, and must not, ignore coal as a major part of it. But if we are to make the fullest possible use of coal as part of our electricity generation fuel mix, our obligation towards the environment demands that we should use clean coal rather than the material which produces smog, fog, acid rain and greenhouse gases.
Although the United Kingdom has a leading place in the three forms of clean coal technology, its share of the world market in that technology fell by 1½ per cent in 1999. That is because we have not made adequate demonstrable use of it domestically. Large-scale demonstration plants have been opened in Spain and Holland, as the noble Lord, Lord Hardy, mentioned. I fear that unless something is done with government support and co-operation, the fruits of the exploitation of this technology will follow the course of many other British engineering feats and will simply disappear overseas.
According to the brief that I received from AES Drax, the Government are not supporting this new technology or encouraging its use for our domestic electrical supply. Allowing for the possibility that something in the brief may have been a bit of lobbying, it makes a number of claims: that burning a mixture of petroleum coke and coal produces more heat with less 327 fuel; that emissions of oxides of nitrogen, effluent, dust and metals will reduce; and, despite that, it says that the current operation of the energy market and environmental regulations mean that the cleanest coal-fired generation plants are at a disadvantage with coal plants offering no abatement of harmful emissions.
I would like to hear from the Minister in his reply to this debate about what steps the Government are taking to encourage, by the sensible application of regulations, the use of this technology for the benefit of our own electrical supply and of our technical export industry.
The Coal Authority, in its submission in reply to the consultation, said that,the single most important action the Government can take to provide the necessary investment climate would be to rationalise the current confusing mix of carbon control measures and organisations, and bring certainty to the issue of carbon taxes".It went on to say that,the current system lacks certainty, transparency, and unfairly burdens the generation and use of electricity compared with other sectors".I hope that the Government will take the opportunity afforded by today's important debate to respond to the Coal Authority's specific points.
There is no obvious replacement of the 24 gigawatts of coal-fired generation other than gas but if, as is currently planned, only 12 gigawatts of capacity is fitted with flue gas desulphurisation, the present coal-fired capacity will be halved by 2020. In fact, retrofitting of supercritical boilers could be commenced almost immediately, subject to sufficient regularity clarity, as both the Coal Authority and AES Drax request. That was also mentioned by the noble Lord, Lord Ezra. Such regulation would need to be framed so as to ensure a satisfactory payback over the expected lifetime of each project.
February's White Paper set out a number of government measures to promote cleaner coal technology. Those will of course be very welcome so long as the Government translate their fine words into positive action. We will all hope that the Minister's response to this debate will give details of the practical steps that they are now taking to achieve that end. The Secretary of State told the other place in its debate on the White Paper that,we are … on course to meet not just",our Kyoto targets,but, we believe, the more challenging … target … of a 20 per cent. reduction by 2010".—[Official Report, Commons, 24/2/03; col. 31.]However, figures from government sources admit that UK emissions of CO2 are now higher than in 1997, and Friends of the Earth estimates that in 2010 emissions will be just 3.5 per cent below 1990 levels.
I quote the words of my colleague, the honourable Member for Reigate, who said,the Government's current policy framework is presiding over the third annual rise in CO2 emissions, and an increase in generation from coal fired plants NOT fitted with Clean Coal Technology … and the confident expectation is that they will miss their target for renewable electricity generation by 2010".328 Dithering over the future of clean coal technology will cost us dear both as regards our environmental commitments and the security and continuity of our supply of electricity.
On the urgent issue of supporting and encouraging by every means possible the development and use of clean-coal technology as a major part of our electricity fuel mix, I cannot do better than to quote the shadow Secretary of State for Trade and Industry, who said:Ducking hard decisions today risks the lights going out tomorrow".
§ 9.29 p.m.
§ Lord McIntosh of Haringey
My Lords, I join everyone who has congratulated my noble friend Lord Hardy on introducing this debate and, indeed, I congratulate all speakers on the quality of their contributions. I also join my noble friend Lord Lofthouse and others in expressing my regard for the fact that my noble friend Lord Mason has spent 50 years in Parliament. I quite understand why he did not stay for the debate. He did, after all, participate in the two-and-a-half hour debate which finished just before this one. He was able to speak about the joys of fly-fishing, which is perhaps more to his taste now than the coal industry. But we should have liked to hear from him on this subject as well.
That is particularly appropriate in the context of the energy White Paper. As my noble friend Lord Hardy said, the White Paper presents a long view because the whole matter of environmental pollution is a long-view issue. It is now virtually certain that global warming is caused by our increasing use of fossil fuels. The Royal Commission on Environmental Pollution recommended—it is reflected in the White Paper—that we should reduce the emission of gases by some 60 per cent by 2050. We have also committed to the Kyoto target of a reduction in gas levels of 12 per cent by 2010. We have already made some progress towards that due to the switch from coal-fired to gas-fired generation. I shall not go into the merits or otherwise of the "dash for gas". I am less sympathetic to it than the noble Baroness, Lady Miller. Nevertheless, that must be the reason we have achieved some progress here, but it means that it will be very difficult to continue to do so after 2012. Both for environmental and business reasons, we simply cannot sit back and let global warming happen.
Of course, coal has many benefits as a fuel for power generation. As a number of noble Lords said, that is mainly because of the security of supply that it provides. But it is also because it is easily transported and stored and because we still have large indigenous reserves, although I believe that geological conditions limit the extent to which they can be exploited. Coal technology is a mature technology. We know all about it.
However, coal has major disadvantages in that it emits gases which, if not controlled, are damaging to the environment. We have measures in place to deal with the acid rain gases such as sulphur dioxide and nitrogen oxides. My noble friend Lord Lofthouse, in particular, referred to the use of FGD to eliminate 329 sulphur dioxide. I believe that that goes some way to reducing the difference in cleanliness between our domestic coal and imported coal. He is right that imported coal has lower levels of sulphur.
However, the real problem now comes surely not so much from acid rain gases but from carbon dioxide. It is still the case that coal-powered plants emit twice as much carbon as natural gas-fired power plants. If we are to continue with coal, we must use it more cleanly than we do at present.
There are restraints which are beyond our control. Reference has been made to the Large Combustion Plant Directive, which will mean increasingly demanding emission standards. If any plant does not meet them, they will have to be phased out by 2015. The emission trading scheme is not particularly helpful. That comes into force in 2005, but it does not really favour coal as a source of power.
Therefore, how will coal respond to those challenges? We have already supported the development of cleaner coal technologies for many years. We have not done so to the extent of £20,000, as my noble friend Lord Hardy suggested, but a programme of around £8.4 million is in place for 40 research and developments projects and a similar amount is available for the transfer of cleaner coal technology to countries such as China and India and for the promotion of British exports. That programme is focused on technologies that use coal more efficiently. It has been a finite programme but we shall review it and update it this year. Although it is a finite programme there is no prospect that it will come to an end.
Not much was made of the mining equipment side in debate. I agree with my noble friend Lord Hardy that our mining equipment industry depends on us continuing to have a home base. We have been active in supporting the mining equipment industry. With the Association of British Mining Equipment Companies we have been supporting an extensive programme of overseas activities; within Trade Partners UK we have been developing a cleaner coal export strategy; and we have been helping them to promote coherent export strategies across the coal sector.
We have also been using the technology transfer and exports programme to promote UK power generation technologies such as cleaner, more efficient boilers to reduce carbon emissions. We are also considering some support for another project that has been referred to, retrofitting a supercritical boiler to an existing coal-fired plant that could act as a showcase for promoting the exports of that technology, particularly to countries such as India and China.
We are invited by the words of the Unstarred Question to look into the future of the cleaner use of coal, in particular by capturing and storing the carbon away from the atmosphere. I was challenged directly by the noble Lord, Lord Ezra, about the US FutureGen project. Of course, they are starting from a 330 different base. They have far more of a coal industry than we do; 55 per cent of their power generation is from coal. Therefore, the investment base for them is of a different order compared with ours. However, we see advantages in collaboration, and although we have made no decisions about joining with them, we are actively exploring that.
There are two main carbon capture technologies that can improve the carbon effectiveness of coal that already exist for its transportation and injection deep beneath the ground. The first one is using supercritical and ultra-supercritical pulverised fuel boiler technologies. Those technologies can offer not the zero emissions that FutureGen is talking about, but 15 to 20 per cent CO2 savings. They can be retrofitted to existing plant. We are considering the possibility of support for retrofitting to which I referred.
The second capture technology is gasification and the combined cycle turbine—integrated coal gasification combined cycle, or IGCC, to which reference has been made and which can produce at least 15 to 20 per cent and possibly as much as 80 per cent savings with carbon capture. Reference has been made already to the two IGCC plants that are in prospect: the Valley's energy project in Onllwyn and the Hatfield project near Doncaster. Both my noble friend Lord Hardy and the noble Lord, Lord Ezra, referred to those and we are supportive of them and hope that they succeed.
Less has been said this evening about the storage of CO2 produced from coal plant which can be applied to either of those main technologies. That involves transporting it either to a depleted oil or gas well or to aquifers beneath the ground. Certainly, the combination of these technologies provides the opportunity to overcome the disadvantages coal currently suffers. So we are looking at the feasibility of securing significant CO2 savings, both from carbon capture and from storage.
Locking carbon away deep underground provides the prospect of material savings. It could be used, as the noble Lord, Lord Ezra, said, to enhance the recovery of oil. There is technical evidence which indicates that it could be used to flush out some of the oil which otherwise would not be extractable. As the noble Lord reminded us, the White Paper said that we should undertake an implementation study in order to see what can be done to get a project off the ground as quickly as possible because we recognise that we have a small window of opportunity before the fields start to be decommissioned. I cannot confirm to him when the report will be available. He is right to remind us and to jog our elbow on this subject. If I learn any more about it I shall write to him.
Before I go on, I should say a word about the abatement plant issue, which was raised by my noble friend Lord Lofthouse and by the noble Baroness, Lady Miller. It is encouraging that two major coal-fired power plants can survive in the current market 331 despite the effectiveness of the new electricity trading arrangements for reducing produce prices. That they are planning to fit FCD suggests that there is a rational business decision to be made and that they could survive with the production of cleaner power. I say to that, "All power to their elbow". It should certainly be encouraged.
However, there are problems with the technologies that I have been describing. I must be honest about that. There is the doubt whether the storing of carbon under the seabed in the North Sea is legal under our international obligations. The cost of capturing and storing carbon is prohibitive at the moment. It could be between £125 to £340 per tonne of carbon abated. It would become less if EOR were to be adopted. Even so, there are still problems about being sure that the carbon will not leak back into the sea and the atmosphere. We must have a regulatory framework 332 for that and for the storage and transportation of the carbon, and we would need to have co-operation with the other countries which share the North Sea with us.
I apologise for having been technical to some extent, but this is a technical subject and it deserves a serious answer. In the light of the time, I shall resist the temptation to talk about the other matters that were raised in debate, such as wind farms, nuclear, even combined heat and power, or indeed the more general issues of the survival of the coal industry. This has been a valuable and well-informed debate about a particular subject, which is the development of clean-coal technology. I am grateful to noble Lords who have taken part. I hope that they will feel that the Government are certainly not neglecting this important subject.
§ House adjourned at sixteen minutes before ten o'clock.