Orders of the Day — Energy Policy

– in the House of Commons at 12:00 am on 19th July 1973.

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1.7 a.m.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I welcome the opportunity to raise the general topic of energy policy during this debate. However, I am somewhat hesitant to raise such a wide topic since I appreciate that in another place on 28th February others more knowledgeable than myself dealt with this issue. Although in my argument I shall have recourse to statistics, my prime intention is not to give a statistical review but rather to set the problem in its various contexts. As Lord Tanlaw said in the other place, …. energy policy is not about extrapolations, or resources at the bottom of the sea; it is about guaranteed supplies." —[OFFICIAL REPORT, House of Lords, 28th February, 1973; Vol. 339, C. 629.] The question naturally arises as to why at this point in time we need to be concerned with guaranteeing supplies. From a United Kingdom point of view the outlook is extremely healthy. Government Ministers make speeches of disturbing complacency relating to the possibility of self-sufficiency by the United Kingdom in terms of energy supplies by the mid-1980s. Nobody welcomes the enhanced prospects for North Sea oil and gas finds more than I do, but these finds do not remove the need to consider world supplies in a world context.

I shall deal first in a United Kingdom context with the coal industry. The most significant element in the United Kingdom energy position is the decline in percentage terms of coal as a primary fuel. In 1948 coal accounted for 90.8 per cent. of fuel input compared to oil's 8·8 per cent. By 1971 coal accounted for 42·7 per cent. and oil 45·4 per cent. We know that the result has been pit closures and a decline in employment.

I represent an area in Central Scotland which has experienced only in recent months the closure of a colliery. I know the result of such a closure to the locality. There is social upheaval. Miners in such areas say that they feel like nomads. Some miners have put it to me that they feel like gipsies because they have had to move so often in the course of their employment.

It seems to be conceded that over the past 10 or 15 years the decline in the coal industry was too rapid and did not take into consideration the cost of keeping a trained labour force available. It is to be hoped that the new Coal Industry Act will give grounds for greater confidence in the industry. It should be noted that the leaders on both sides of the coal industry have been most vocal in calling for a fuel policy. Coal supplies can be guaranteed for a relatively long time if proper policies are adopted for investment and recruitment.

The background history of optimism that relatively cheap nuclear power would be available to the United Kingdom is too well known to repeat. What has not been fully noted is the success of other countries in addition to the United States in the generation of electricity by hydro-geothermal nuclear means. By this year both Japan and Germany had more capacity either in use or under construction than the United Kingdom. Our lead in that important area of advanced technology seems to have been lost because of a number of factors. One such factor is the structure of the industry in the United Kingdom which supplies the necessary equipment.

Photo of Mr Ronald Brown Mr Ronald Brown , Shoreditch and Finsbury

Is my hon. Friend aware that the Germans. who rushed ahead to import the American form of reactor, are now having grave second thoughts?

It appears that they were not so wise to get themselves into that position.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I fully recognise the point my hon. Friend makes. The Government have announced their intention, in relation to the reconstruction of the industry, of evolving a new holding company, but we still do not know what reactor system is to be favoured before the fast breeder system reaches the stage of commercial ordering by the late 1970s.

I recognise the Government's difficulties but, if the industry is to forge ahead and if we are to keep the design personnel in being, a decision must be made as to the type of reactor which is favoured. That would enable the Central Electricity Generating Board to make the correct decision or a wise decision. Such a decision must be backed by the Government. The industry knows that it must assess its potential for holding its labour force in terms of design and construction. That is a matter which the Government should try to clarify as soon as possible.

I now deal with oil and North Sea gas. Clearly, in terms of keeping pace with economic expansion, the fuels most likely to meet the short-run requirements of bridging the energy gap are oil and natural gas. The Government's recent publication "Production and Reserves of Oil and Natural Gas on the United Kingdom Continental Shelf" indicates that the production of gas from the North Sea is unlikely to expand much beyond 4,000 million cubic feet a day in the 1970s. The United Kingdom position could be assisted by the use of gas from other sectors of the Continental Shelf, but that will depend on detailed negotiations.

In the short run, therefore, it is oil which will have to fill the energy gap, not only for the United Kingdom but for the rest of the Western world. World energy consumption is expected to rise by annual increments of 6 per cent. in the period 1970–85. The European Economic Community countries will use oil to supply 60 per cent. of their energy requirements. For Japan the figure will be 70 per cent. and for the United States it is expected that, surprisingly, it will decline from 45 per cent. to 40 per cent.

That means that the EEC countries will consume 1,000 million tons of oil by 1985 instead of the present 500 million tons and that imports of oil by 1985 will be about 900 million tons. Figures of expected imports by the United States range from 600 million tons a year to 900 million by 1985, and Japan's imports might exceed 500 million tons.

The North Sea oil finds will have to be on a gigantic scale to make any impact on such enormous demands. Not even the most optimistic commentators suggest that that will be the case. Internationally, apart from the Soviet bloc, we are in the hands of the OPEC countries, with all the implications of being held to ransom and insecurity of supply.

Although I have somewhat played down the role of the North Sea finds in an international context, they are important in providing a bargaining counter vis-à-vis the OPEC nations. I consider the finds not as a bargaining item to obtain an EEC energy policy but rather as a means whereby the EEC can work with the United States and Japan to coordinate policy to ensure oil supplies for the Western industrial nations. No doubt the Minister, like me, will be pleased at the overtures between the United States and the Japanese Governments to see whether they can achieve co-ordination of oil policy, particularly in relation to the vexed question of investment.

It can be seen that the Government's tactics and strategy on North Sea oil are vital. The current licence conditions require the oil to be brought ashore in the United Kingdom except where permission not to do so is specifically granted. To achieve a better balance of payments advantage, the maximum amount of oil should be refined in the United Kingdom. That should mean a build-up of refining and allied capacity in the United Kingdom. Direct consultations should take place between the Government and the oil companies to map out a national approach for oil refining and to restrict the construction of refineries in the South-East of England, where the refineries under construction or planned are not desired by the population.

We know from parliamentary answers that the next round of licences is not due until after 1973. Of crucial importance are the terms we insert in the fifth round. A repetition of the fourth round fiasco would be unforgivable.

What, then, might be the minimum requirements? I list eight of them in order. I should be grateful if the Minister would give them some consideration and attention.

First, there should be a carried interest provision ranging from 30 per cent. to 50 per cent. Second, there should be a reduction on the life of the concession from the present 46 years to something under 30 years with half of the allocation being relinquished after six years. Third, the initial payments should be raised. Fourth, the royalty should be on a sliding scale ranging from 10 per cent. to, let us say, 16 per cent. Fifth, preference should be given to consortia having in their number companies in which there is a public shareholding and to nationalised industries. Sixth, in the absence of a clause requiring licensees to use United Kingdom equipment, manpower, services and bases, a clear understanding should be arrived at that the Government will expect fair bidding to be offered to all United Kingdom companies for orders.

I interpose here, in view of discussions in the House today, that I would welcome an assurance that, despite the overtures of the EEC Commission querying the 4 per cent. credits for mobile offshore equipment, nothing in the Commission's approach endangers the strategy outlined in the IMEG report for the offshore supply industries. In view of the exchanges in the House today, the industry would welcome such an assurance from the Minister.

Seventh, there should be a tightening of the arrangements for the landing of oil in the United Kingdom, with an understanding that it will be expected that the crude oil will be processed here unless good reasons are shown for its export. It may be appropriate to have terms which differentiate between areas where discoveries have already been made and new areas in deeper water which require more advanced technology for exploration and production. Eighth, the Government must insist on open information from the companies, not only from the viewpoint of royalties but also from the viewpoint of the general tax position.

Those are minimum requirements. What has to be assessed is the rate of exploitation of these resources, and this is a balanced judgment as to how fast we can go.

No matter how much we intensify the search for oil and coal, the quantity of these resources in world terms is finite. Attention must be turned to new sources of power. Given that we can avoid environmental hazards, the best medium-term bet seems to be nuclear power, if we can get the necessary breakthroughs in the fast breeder reactor. In the longer term, attention ought to be turned to the exploitation of solar power and the conversion of energy potential from the wind and the sea.

Commenting on the recent conference in Paris, jointly sponsored by UNESCO and the French Government, to discuss "The Sun in the Service of Mankind". the New Scientist claimed: There are many technological possibilities for solar energy. Most of them are well enough understood to convince all but the most sceptical that the sun can contribute significantly to man's energy supplies. The question is, can we develop these technologies so that the energy is available at a price we can afford? I should like to know the Government's attitude to such research and development. We know that the United States has a Solar Energy Panel which has made recommendations for short-term and long-term research running into billions of dollars. Have we in the United Kingdom any budget for this? Would it be appropriate to request the Prime Minister to place such a topic on the agenda for the forthcoming conference of Commonwealth Prime Ministers? This is an area of research in which the Commonwealth could be a unique institution for linking the needs of the developed and the developing world and in solving some of the problems of energy supplies.

In conclusion, may I say that I am conscious of how inadequately I have dealt with such a vast subject. I have not mentioned the special role of the electricity boards and their relationship with the construction and engineering industry and the effect on the employment prospects of thousands of our people.

What I should like to see is the Government creating a forum—call it if one will a National Fuel Council—to discuss investment plans and views of market shares in an atmosphere not of competition but of consultation. A short-term measure might be to require joint appointment to the boards of public corporations and to the British Petroleum Company. Additionally there is an urgent need to make us conservation-minded and to devise a fuel consumption and transport policy which saves scarce resources and does not squander them.

I end with a well-known quotation from Seneca: In a moment the ashes are made, but a forest is a long time growing.

1.26 a.m.

Photo of Mr Laurance Reed Mr Laurance Reed , Bolton East

The difficulty about laying down a definitive energy policy is the speed with which the overall picture changes.

In the last few years the overall picture for us has been altered dramatically by two developments: first North Sea oil, and secondly the world energy crisis. Three years ago not a drop of commercial oil had been found in the United Kingdom portion of the Continental Shelf, and few would have guessed that in the space of 10 days this year no less than three oilfields would be confirmed.

The speed of change has been so great that I still find most people in this country believe that those finds amount to no more than 10 per cent. or perhaps 12 per cent. of our total requirements, and I have the impression that a large number of my parliamentary colleagues, who should be better informed, believe the same. In fact, the Department's own estimate is that by 1980 or the early 1980s Britain will be producing at least 70 million tons of oil per year, and perhaps as much as 120 million tons a year.

Those official figures err on the side of caution, and I understand and accept the reasons why that must be so, but those who do not occupy positions of officialdom can perhaps be a little more bold. The official figures, it is important to note, do not include any estimate of what reserves there may be in those parts of the British Continental Shelf that remain undesignated and, since these include some areas of quite exceptional promise in the English Channel and to the West of Scotland, including the Rockall/Hatton basin, it seems that there is a strong probability that Britain will eventually become independent of foreign supplies, and possibly a significant exporter as well.

But let us suppose that that forecast is too optimistic and incorrect. We still cannot forget our huge coal reserves. The value of coal is relative, and, if we are to have to pay about five dollars a barrel for our oil by 1980, what is so much dirt in the ground today will be gold in our hands tomorrow.

"Crisis" seems to be too strong a word to use in relation to current world energy problems. There are ample world energy reserves if we are thinking in absolute terms. What we have today is an imbalance between supply and demand which may last for 12 or 15 years before nuclear power and other forms of energy come into their own. As we know, the situation has been created primarily because of the end of America's self-reliance on energy. I understand that about half of her oil requirements will have to come from the Middle East in the 1980s. Apparently, tar sands and shale deposits are not adequate to make up the deficiency, and it is considered that Communist sources, if there are any, are too risky and that nuclear power cannot close the gap for America until the 1990s. Thus, for a decade or more the United States will be dependent upon external sources and her freedom of manoeuvre will be considerably circumscribed.

I understand that Western Europe as a whole can expect the demand for energy to double, and in Japan to treble. Of course, this means that the Western world's balance of payments will go from bad to worse. The cost of oil imports to Western Europe could be as much as 35 billion dollars per annum and America's annual deficit for oil imports around 25 billion dollars per annum. The competition for petroleum between America, Europe and Japan will create considerable international problems and complications.

On the other hand, we can expect those in the Arab world to exploit their new bargaining strength to the full and they will wax exceeding fat on the profits. One estimate given to me is that their total surplus in one year could be around 70 billion dollars. Fears have been expressed about the possibility that they will use these huge surpluses for political ends. Whatever they may do on the political front, it seems to me certain that before very long they will decide to save their money, not in the banks but by locking their oil in the ground as an investment for the future. If that happens, it will precipitate an earlier and even greater international energy problem.

In this situation it seems to me that Britain occupies a unique position because we look like being the only major industrial country in the West that will be entirely self-supporting in energy, and certainly there will be no balance of payments problems for us. It is very difficult to know precisely what the effect on the balance of payments will be because it depends on what the world price of oil will be, but there have been suggestions that it will be as high as £1,500 million per annum.

Though we shall find ourselves in a position of comfort—an enviable position—we shall also find ourselves in something of a predicament because, as a member of an energy deficit bloc, we shall have an interest in keeping the cost of energy down, but as a major producer of energy we shall also have an interest in seeing the price go higher.

World prices will be determined not by the cost of producing oil, gas or coal but by the demand/supply situation and the political complications which result. One very definite possibility which presents itself is that we could isolate ourselves completely from world energy costs, feed our industries with cheap fuel and undercut all our major industrial competitors who will be struggling to hold down their export prices as energy costs go through the roof. Needless to say, such a policy would set up very severe strains inside the European Economic Community and presumably would run counter to the declared aim of political unity.

Nevertheless, it would be foolish not to recognise that any Government of 1980 would be under an immense temptation to do it, price rises having the effect that they do on the fortunes of political parties. The alternative, of course, would be to let our oil be sold at the price established by the Arab monopolists, so deriving the maximum financial returns in royalties, taxes and profits. Either way, however, we look as though we shall do exceptionally well.

It is far too early to say which way we should play this. Anyway, there are factors to be taken into account far beyond the realms of energy policy. As I said at the beginning, it is very difficult to lay down any hard and fast rules about energy policy when the picture is changing so quickly, and at this stage I do not think I could identify more than three strategic aims of policy.

First, we should continue to explore at maximum speed for possible fuels in this country—for oil, gas and coal. It is only when we have an accurate inventory of our total reserves that we can possibly decide how rapidly we can afford to exhaust those capital resources, what should be the contribution of coal, of oil or of gas to our total energy budget and where they are best used, how much should be sold abroad and how much held at home.

The second strategic aim is that we must strive to hold down costs by improving extractive technology for hydrocarbons under sea and on land and by finding new ways of making the most efficient and effective use of the energy by eliminating waste in use.

Third, we must recognise that hydrocarbons are finite and that the boom that is created by these new discoveries will last no more than 20 or 25 years. We must therefore have an eye for the future and invest now in research and development which will enable us to harness new forms of energy which are either inexhaustible or relatively so.

1.38 a.m.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The matters that I should like to raise are more appropriate to the Environment Vote than to the Trade and Industry Vote, and I do not particularly envy the Under-Secretary of State for Trade and Industry the very wide scope of affairs with which he has had to deal tonight. Nevertheless, I am grateful to my hon. Friend the Member for East Stirlingshire (Mr. Douglas) for letting me latch my topic on to his subject, and I am grateful that he has chosen to raise this matter tonight.

Both my hon. Friend and the hon. Member for Bolton, East (Mr. Laurance Reed) have admirably set the stage for many of the things I want to say. I do not want to precipitate any atmosphere of crisis, but I want to draw attention to some of the points which should be featuring in the Secretary of State's thinking in the Department of the Environment and some of the basic changes in our planning assumptions which we should already be making.

If we have not yet felt any particular draught from any forecast or any energy crisis in this country, there are already some gloomy forecasts and some dramatic happenings on the other side of the North Atlantic. We have already seen President Nixon's programme of encouraging oil imports, raising some of the price controls and encouraging people to drive their cars more slowly. We have seen the forecast of Professor Edwin Barbe, of the University of West Virginia, that by 1976 there will be 31 million cars idle in the United States, with a rate of unemployment of about 23 per cent. We have already seen American car dealers stuck with bigger cars that they cannot get rid of because of a switch by car buyers to smaller and imported cars.

In Los Angeles there are gas stations closing down at 6 o'clock in the evening and being closed for the weekend. Pan American has told its pilots to cut their cruising speeds in jumbo jets. Eastern Airlines has told its pilots to taxi round airports on two engines. There is even a possibility now that the conservationist-controversial project, the Alaska pipeline, may at last go through if some of the legislative tangles can be sorted out in the Senate and the House of Representatives.

We still do not know to what extent all this may be a scare campaign, but, even if it is something of a scare campaign, it raises some pretty important factors which will have international repercussions.

It was interesting to hear that the Prime Minister has said once again tonight that this country intends to go ahead with the third London airport, with the Concorde project and with the Channel Tunnel. I wonder how far he has taken into his calculations some of the energy forecasts which have been made in the United States.

Ought this country to be drawing up some kind of plan? Ought we to be encouraging certain sectors of oil consumption while discouraging certain other sectors, and perhaps, for example, discouraging central heating? I hope that the Minister will have something to say about matters of that kind with reference to his Department's plans.

My hon. Friend the Member for East Stirlingshire and the hon. Member for Bolton, East have discussed the implications of the oil crisis in some detail. I do not propose to go deeply into the Akins-Adelman argument in the United States. I shall not dwell on how much oil the Arab countries may leave in the ground or how much they may want to raise the living standards of their people. Both my hon. Friend and the hon. Gentleman know how relevant these factors are.

We do not know how much the Arab States will use their newly-won resources for speculation in the international currency markets. We do not know the possible viability of the Adelman-advocated boycott of the Arab States. We do not know the role of the Japanese. What we do know is that Japanese oil imports are increasing at about 14 per cent. per annum. We do not know whether the Akins forecast of oil at seven or 8 dollars a barrel is well founded, but what we do know is that the price of oil will rise quite substantially by 1980.

I do not wish to take tip some of the forecasts made by my hon. Friend and the hon. Gentleman about the role of North Sea oil in our domestic consumption. Suffice it to say that, despite the rather rosy forecasts which I understood the hon. Member for Bolton, East to give about the role of the United Kingdom as even an oil exporter, I still cannot help thinking that we could be involved in some kind of international oil grab, reminiscent perhaps of the grab for Africa at the end of the last century. Since both Japan and the United States have already put overtones of "a matter of national survival "on the search for oil, the competitive atmosphere for oil imports will be much more ruthless than some of the more gentlemanly descriptions we have heard so far would indicate.

We have such people as the chairman of Continental Oil even saying that over the next 15 years the United States will have to double its coal output and construct about 280 nuclear stations. I should not like to be as crisis-foreboding as that, but I believe that some sort of forward planning ought to be evident in the Department's thinking, because to be forewarned is to be forearmed.

The British Road Federation sent me some statistics to show that even if the price of a barrel of oil were doubled, because of the size of the freight element and the tax element, the price of petrol or diesel fuel would rise by only one-fifth. That may well be, because with a price increase there may be a substitution of propulsive power for road transport. This country's transport planning ought to take account of some notion of substitution.

It is because we are still planning on the basis of infinite mobility based on an infinite supply of energy and resources that I question whether we are sufficiently anticipating some of the problems we may encounter. It is a fact that there may be a substitution of battery-powered cars in cities, but I do not think we shall get battery-powered 32-ton gross lorries going up the M1. It is a fact that we may get other kinds of substitution.

What worries me is the kind of "locking-in" effect we may be producing by taking some of the planning decisions which have been taken. Speaking at a symposium on conurbation transport at Manchester University last October, Gerald Foley of the Architectural Association's technical studies team said: Well within the time span with which we are concerned as transport planners, rising prices and diminishing availability of petroleum fuel will impose such constraints on vehicle use and ownership that provision for the levels of traffic envisaged in current studies will be completely superfluous. In view of its dispersive effects on urban form and the consequent dependence on motorised transport, the 'locked-in demand' phenomenon (for example, once people have cars and oil-fired central heating, they cannot easily switch), the provision of additional facilities for motorised mobility above those available today can in fact be regarded as pernicious. That puts the point I wish to make far more effectively than I could.

Despite some of the very gloomy forecasts which have been made, despite an almost certain increase in the price of oil per barrel and despite a possible severe shortage of that commodity over the planning period with which we are concerned, we still go ahead with constructing low-density developments like Milton Keynes and talk about building big road complexes linking Birmingham with a series of motorways—M40, M38 and M42. We still talk about the ringways and about the "Chunnel" having to include provision for road vehicles, although there is ample evidence that if there were a rail tunnel it could be at least one-third cheaper.

All of this is based on the belief that there will be an infinite variety of supplies and infinite mobility as a result. The BBC energy supplies programme brought the point home clearly enough that we are moving all the time to a less and less efficient use of our existing and our future resources.

The Under-Secretary will probably say that, in supporting some of the recommendations of the Select Committee on Urban Transport, the Government are to some extent anticipating possible fuel shortages and encouraging the switch to public transport. He may mention such things as infrastructure grants and railway social subsidies. I do not believe that these are enough. I do not believe that we ought to commit ourselves to plans which will have this locking-in effect for the next 60 years.

Already, instead of just talking about the need to make the journey to work and from work by public transport, we should be questioning whether there should be a journey to work. We are still planning for long-distance commuting. I wonder whether we should not be questioning the raison d'étre of commuting.

I have always stressed the value of the motor car as giving more mobility to the working man and enabling him to take his family out and about, for recreation and other purposes. To go ahead to base all our transport planning on the assumption that the motor car provides universal mobility is a detrimental assumption.

Mayer Hillman and his team, in the very excellent PEP booklet "Personal Mobility and Transport Policy", have brought out the fact that even in Britain today two-thirds of adults do not have the optional use of a car and only 11 per cent. of housewives, even in areas where two-thirds of all households have cars, hold driving licences. Only 6 per cent. of pensioners hold driving licences. Despite this low level of mobility, we still go ahead and plan out-of-town shopping centres like Brent Cross which are totally dependent on private motor car access. But even in the year 2000 it is forecast that only half the adult population will have car access.

I wish to refer to some of the things said in this excellent and up-to-date publication. The London traffic survey, the Runcorn new town survey and all the forecasts made and on which plans are being based make such comments as The automobile has freed the family … and Public transport must be provided for the people unable to use cars, although they are relatively few in number". They say that there will be at least one car for every family by the year 2001". If we analyse the main ingredients of traffic plans for places such as Edinburgh and even the Greater London development, we see that we are coming to conclusions and basing plans with gigantic locking-in effects over the next 50 to 60 years which commit us to a determined transport policy. We are prepared to base whole town plans on the assumed universal mobility allegedly provided by the car. It is regrettable that most of the traffic forecasts miss out completely those who walk. We have never had a comprehensive inclusion of walking in the traffic surveys. But, despite that, we are now building roads and going ahead with projects which will generate their own traffic. We are going ahead on these bases, although, for example, the car will use about 200 sq. ft. more than the minimum allowed for an office worker.

We are planning suburban residential locations of such low density that it will be impossible to support a bus service without extensive subsidies. We are making plans when road accidents cause about 8,000 deaths a year, with all the environmental detriment of pollution, exhaust fumes, congestion and wear and tear.

In a nutshell, in 1971 we spent £35 million on subsidising school transport, £30 million on subsidising rural buses, £7 million on subsidising bus operations, £60 million on subsidising British Rail socially necessary services and £22 million on fuel tax rebates. Put together, those sums would amount to about 10 miles only of urban motorway. To put it more clearly, in this forthcoming year, 197374, it is forecast that we shall spend £896 million on roads and £173 million on public transport. We are committing ourselves very extensively on a basis of fuel resources and energy resources which cannot be guaranteed at present prices and pretty certainly during that period will not be guaranteed at all, despite the fact that the use of the railways can give us 10 times as many seat miles per gallon of diesel fuel compared with road transport. We are doing it despite the fact that the railways can give us the same seat mileage at one-third of the energy requirements of road transport. We are doing it despite the fact that a 1,500-ft. railway train produces 455 net ton miles per gallon of diesel fuel compared with a 32-ft. lorry which produces 143 net ton miles per gallon of diesel fuel.

There is already enough doubt the future continuity and supplies of our energy resources to cause us to do some drastic fundamental planning now. We must change the assumptions on which the planning is based. It is not just acceptance of the report of the Select Committee on Urban Transport that is required; we have to discuss basics.

We have to examine the role of and the necessity for the journey to work. We have to examine the need for public subsidy—extensive public subsidy—of inner city housing. We have to question severely the massive drift to the suburbs and the out-of-town living that is still going on.

There is the possibility that we should be bringing forward tax policies that would discourage mobility. There is the possibility too that we should be think. ing about which sectors of industry should be given priority in oil consumption, particularly as individual motorised transport cannot be adapted to nuclear energy or coal. In fact, if we are to rely on individual personalised transport, we shall have supreme difficulties in adapting to the other fuels mentioned tonight.

Worst of all, I fear that the kinds of plans now being laid down for the new towns and the new roads will commit us to what may become an outdated form of transport. If we are to question the assumption of enlarged mobility based upon universal provision and ownership of the private motor car, we should be doing so now, because otherwise it will be too late.

1.57 a.m.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

We have had an extremely interesting debate. I congratulate the hon. Member for East Stirlingshire (Mr. Douglas) on a tour d'horizon of the fuel problem. He conducted it with that degree of competence that we have come to expect of him.

I congratulate my hon. Friend the Member for Bolton, East (Mr. Laurance Reed) and the hon. Member for Nuneaton (Mr. Leslie Huckfield) more on being able to raise the subjects they wish to discuss in this debate on the oil crisis, thus allowing them to go to sleep a little earlier than they might otherwise have expected. I am certain that they will forgive me if I spend the greater part of my time answering the hon. Member for East Stirlingshire.

With as much sensible force as I can summon at two o'clock in the morning, I should like immediately to look the hon. Member for East Stirlingshire in the eye and say that I resent his uncharacteristic accusation that the Government were making complacent speeches about energy policy. I would reject that completely. My hon. Friend the Minister for Industry and I for a number of months have been making it clear that we do not regard it as an energy crisis.

There are problems in energy supply. There always have been problems and I think that they are likely to continue for many years. The Government have proved that they are not complacent about these problems, as is evident when we consider what has been achieved during this year.

Perhaps I may break off here for a moment to rectify an omission on my part and apologise to you, Mr. Deputy Speaker, before you leave the Chamber. I omitted to ask the permission of the House to speak a second time. It will be within the recollection of hon. Members that I had only recently been on my feet replying to the previous debate. May I rectify that omission and continue to speak with the leave of the House?

As a Government we have taken some of the most major steps attempted by any administration at any time in the reorganisation of the coal industry. At the same time we have fulfilled the obligations that we set ourselves for the restructuring of the nuclear power industry which is now corning to fruition. We have continued with our policy regarding electricity generation. As the House knows, detailed consideration is now being given to the fuelling of the next lot of electricity generating power stations. All these matters make for a major co-ordinated fuel policy.

In some aspects of his speech the hon. Member for East Stirlingshire was unnecessarily condemnatory of our position regarding nuclear-powered electricity generation because, when mentioning what the Japanese and the Germans were doing, he neglected to point out that we are still ahead of the world as 10 per cent. of our electricity generation comes from nuclear-powered stations. No other country can claim that record.

The hon. Gentleman went on to demand that the reactor choice should be proceeded with and implied that this matter ought to have been finalised by now. As he knows, a nuclear power advisory board in the new structure is being set up to advise the Government on a number of items, a major one being reactor choice. To suggest that we are slipping behind the rest of the world does not take account of the statement made by my right hon. Friend the then Secretary of State for Trade and Industry last August when he outlined the work with which we would proceed in dealing with the examination and updating of the AGR, the further design and construction of the steam generated heavy water reactor, the further consideration and contract dealing with the safety considerations of light water reactors and the continuation of the HTR experiment to ensure that we could consider and update it within any consideration of reactor choice before turning to the fast breeder. The second fast-breeder reactor at Dounreay will be coming on stream, we hope, later this year. We should not, therefore, underestimate the considerable activity of the Government in this area.

Energy is a vital support to our civilisation, and the proper working of our economy depends upon getting adequate and secure supplies at the lowest possible cost, taking account of social as well as commercial factors. There has been a lot of talk about an energy crisis and we believe that this has been overdone. To put it into proper perspective, it is important to distinguish between the two different energy supply problems—the short-term supply difficulties and the longterm rundown of world reserves of conventional fossil fuels.

The risk of short-term difficulties is always with us. It could be caused by technical breakdowns, action by overseas suppliers and delivery problems. The best protection is to have good stocks, a diversification of sources of supply and a readiness on the part of the Government to take emergency action if a real shortage develops. We have already taken steps on each of these fronts. There is the Coal Industry Act, there is the EEC directive requiring member States to have 90-day oil stocks by 1985 and there is the Government's policy of rapidly developing the North Sea oilfields. These represent a substantial diversification in sources of supply.

The longer term problem of finite resources of conventional fossil fuels is a more complex problem. There can be two basic responses to it. Either encourage increased exploration or develop new energy sources, including the nuclear power. The Government believe that it is right to adopt both approaches in parallel. That is why we have gone for rapid development in the North Sea. We have taken steps to moderate the run down of the coal industry. On a world scale there are vast unconventional sources of hydrocarbons. It is technically possible to extract oil from oil shale, tar sands or even coal if the price is right. There is the possibility of large quantities of oil and gas which will be found in deeper waters in many other areas throughout the world. There is also the factor of secondary recovery where, as the price of oil rises, its extraction becomes an economic proposition.

So many people when analysing the problems of the future fail to take into account the way in which the discovery of hydrocarbon fuels has responded over the last 40 years to the increase in demand.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

The Minister's argument does not stand up with a projection of the past into the current situation. The oil companies are concerned that proven reserves are not keeping pace with the current demand.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

Of course one can project in certain areas figures suggesting that proven resources of fossil fuels increasing at certain rates will lead to problems in the late 1980s or at the turn of the century. But that means working on the old pattern. The price factors as shortage arises, as Middle East situations have shown, put an entirely different complexion on the way the hydrocarbon resources of the world may be replaced. That is why I have referred to secondary recoveries and shale sand recoveries which so far we have not gone into in our concept of resources.

I agree that we shall want to turn towards nuclear generation, which is the most obvious replacement factor. We shall need to ensure that hydrocarbons are used where there is no substitute for them. But where substitution can take place, such as in electricity generation, there are, for example, large resources of uranium. A fast-breeder reactor uses uranium many times more efficiently. In the very long term, energy from nuclear fusion may become practicable and it should become a limitless source of energy.

Solar energy and wind and tidal power have been suggested, but these are not very promising in the United Kingdom. There are very few sites at the moment where tidal power would be viable in relation to total energy demand. Much as I wish it otherwise, the British climate is not encouraging for solar power. I wish it were so for reasons other than the production of energy.

We have not a specific programme for solar power but we keep in touch with the work done on it in other parts of the world. I note the suggestion that solar power might be a topic for discussion at the Commonwealth conference. It is an interesting suggestion and I should like to process it a little further.

Photo of Mr Laurance Reed Mr Laurance Reed , Bolton East

My hon. Friend should bear in mind that tidal power is completely pollution free, that the costs are stable over a very long period, and also that we would be exploiting a resource which would be inexhaustible. Even to use the Severn estuary would save 5 or 10 per cent. of our existing energy in fossil fuels. This would help to conserve those of our resources which are not inexhaustible.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I accept that if it can in any way be taken to be economically viable. I was at one time very keen on the idea but the more I have studied the practical figures of the unit cost of electricity generated the more I see that the thing is put out of court at the moment as impracticable. That does not mean to say that we should not look at these things in the future as engineering techniques develop.

My hon. Friend the Member for Bolton, East said that dirt in the ground today is gold in the hand tomorrow. That is a very interesting aspect of conservation. Nevertheless, we must reflect on the counter-argument put forward by the hon. Member for East Stirlingshire that there is a need to ensure that we are not complacent and are able to deal with problems involving the possibility of shortages in the immediate future. The need to be able to use indigenous supplies is of the greatest importance. This is why the Government have felt a need to ensure that we should maximise both exploration and exploitation of the North Sea oil hydrocarbons.

There were two main ingredients in the remarks of the hon. Member for Nuneaton. First, there were the measures designed to secure the greatest efficiency in the use of available energy sources-in other words, energy conservation measures. I have great sympathy with that view, and I am sure that nobody in any nation today should be foolish or wasteful in the use of energy. Secondly, there is the work intended to establish the scientific and economic implications of developing alternative sources of energy for transport purposes.

It has been calculated that in 1971 transport as a whole took about 14 per cent. of the United Kingdom's total consumption of primary fuel. Road transport accounted for over three-quarters of that 14 per cent. It will not surprise the House to learn that not only is that great majority of road transport mileage run by the private car but that this is by far the most inefficient method of travel in fuel efficiency terms. Measuring the average fuel consumed for each person carried, the average car figure is between 25 and 50 person-miles per gallon—depending on the character of the journey—compared with between 150 and 300 person-miles per gallon for an urban bus operating at peak times. It is right that the current work in this field should examine carefully the energy conservation implications of urban policies whose effect would be to transfer people from their cars to buses and trains.

Outside the urban and predominantly passenger fields there is the question of freight transport. In terms of ton-miles per gallon, a 700-ton freight train is nearly two and a half times better than the best lorry. However, rail is very much less favourable for the carriage of smaller loads. Few freight origins and destinations are at railway terminals, so that some road transport is inevitable. A road-rail-road journey between two points is nearly always longer than the corresponding road journey. The average length of freight haul by road is only 30 miles, and only 7 per cent. by weight is carried more than 100 miles.

Thus the great majority of present road freight transportation falls into the bracket where rail travel would not present a significant fuel saving. I thought that that was a matter, in view of the wild suggestions which have been made, which would be useful to put before the House.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I respect the figures which the hon. Gentleman has given. I do not disagree with them. The central point I was making was that we are now concentrating on less and less efficient uses of fuel in our transport strategy. For example, over the past decade the amount of tonnage carried by road has gone up 40 per cent. but the amount of ton mileage has gone up 67 per cent. That shows that, on the hon. Gentleman's figures, we are all the time moving to a less efficient form of transport in terms of fuel consumption.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

My right hon. Friend the Secretary of State for Trade and Industry has made it clear that alternative sources must clearly be considered in the widest possible context of potential applications. That is why there is close liaison between the Department of the Environment and the Department of Trade and Industry on research and development. In particular we are involved in work which is being done by the Electricity Council and British Rail on the development of a sodium sulphur battery suitable, amongst other things, for powering road vehicles and providing auxiliary power for railway locomotives. The Department of the Environment is providing 50 per cent. of British Rail's costs for that project.

It is important to realise that a considerable amount of time, effort, thought and research is being directed towards the matters which the hon. Member for East Stirlingshire has raised.

In summing up what has been a useful and interesting debate, I refer to an article on oil in the Economist which was published on 14th July. The last sentence said: The sooner the phoney energy crisis is forgotten the better. We must not talk ourselves into a crisis. There are, of course, problems which are being dealt with by the Government, and that is the way in which we should continue.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I raised a specific matter-namely, tapering grants or credits. It would be disturbing if the hon. Gentleman made no reference to them. I gave him notice.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I apologise. The hon. Gentleman raised eight points which I noted which I considered to be of particular concern. It would be wrong of me to add anything further now other than to say that all the points he has raised are being very much taken into account before any action is taken on the fifth round.

The hon. Gentleman asked for an assurance about the position on the Clyde concerning credit for the mobile off-shore supply industry. I cannot say anything better than was said by my right hon. Friend the Minister for Industrial Development in answer to a Private Notice Question earlier today. My right hon. Friend made it clear that he saw no reason to believe that there was anything which would lead to the undermining of the IMEG Report. We do not consider that to be the case.