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Clean Coal Technology

– in the House of Commons at 6:59 pm on 12th October 2005.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Watson.]

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore 7:17 pm, 12th October 2005

I thank my hon. Friend the Minister for his time today in a series of coal-related debates—not for nothing is he called the Energy Minister, given all his running around. I also pay tribute to other coal-mining MPs who this morning responded to the call by my hon. Friend Mr. Grogan for a good one-and-a-half-hour debate on the future of the coal industry.

The names Wyndham, Deep Navigation, Abernant, Garw Ffaldau, Marine, Merthyr Vale, Britannia and Six Bells are all ghosts from the very recent past in Wales—they are some of our most famous deep pits. For many people it is like reading the obituary column in the local paper and seeing the names of friends who have gone. Only one of all the deep mines in Wales is now left. That is to the credit of a singular group of people in Tower colliery who, against the odds—against the Government and the management of the day—defied advice and literally carved a success story out of the Welsh hills. I applaud my hon. Friend the Minister for announcing this morning the additional phase 2 funding of £832,000, which will go down very well in the constituency of Cynon Valley. My right hon. Friend Ann Clwyd has campaigned long and hard on behalf of the Tower colliers and their families.

What if the rumours of the death of deep mining in Wales and the UK are greatly exaggerated? As the Minister knows, the long list of defunct pits that I read out have a common feature in that they are also a list of the workable coal reserves in south Wales—250 million tonnes of potentially workable coal reserves. Add to that the current energy challenges faced in the UK, mix in the proven and still developing capabilities of clean coal technology, and all of a sudden we have the ingredients for a future for coal. The same ingredients could be mixed throughout the United Kingdom's coalfields. Wyndham-Western, Deep Navigation, Abernant, Garw-Ffaldau, Britannia, Six Bells—that is not an obituary. Those pits can be used to revitalise UK energy policy. High-quality coal reserves can help our energy needs and our energy security and help UK plc to develop a leading edge in clean-coal technology.

Photo of John Robertson John Robertson Labour, Glasgow North West

Does my hon. Friend agree that we should support companies such as Babcock and Wilcox, which are at the leading edge of new technology for clean coal?

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I agree entirely. I will deal with Babcock and other technologies shortly, because they point the way forward.

In south Wales, 250 million tonnes of reserves were identified back in 1979. The rapid and brutal pit closure programme meant that only 20 million tonnes have been mined. Modern mining techniques and global energy changes make the reserves more viable and they could provide power for more than 50 years.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

Is it not testament to the lack of a proper energy policy in this country that we are discussing the subject only now? We should be leading the world, with many plants using the technology.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I empathise with my hon. Friend but I hope that, especially after this morning's debate and the Minister's comments this evening, we will be more optimistic about the way forward for UK Coal. I believe that the challenge exists and that the Government are rising to it. My hon. Friend the Minister will excuse me if I push a little harder.

In his speech in Brighton, the Prime Minister talked about nuclear power being back on the agenda. The argument for coal is more clear-cut, compelling and categorical. If only the Prime Minister had asked me to help write his conference speech—I am still available for a small fee—I could have finessed it with a touch of black gold.

It is said that surely nobody wants to continue mining nowadays. Yet modern mining methods, including improved ventilation underground, mean that the work and environment are greatly improved. That is essential if we are to avoid or minimise the legacy of respiratory disease and other occupational illnesses.

Photo of David Hamilton David Hamilton Labour, Midlothian

Would that enable the Scottish coal industry, which is non-existent apart from open cast, to consider the possibility of drift mines? I agree wholeheartedly about the new technology but when we talk about UK Coal, we mean English coal and Welsh coal.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I agree. The feasibility of all the reserves needs to be considered without favour.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

My hon. Friend mentioned Tower in Wales. Its existence is a credit to the mining industry. He also mentioned UK Coal, which is little more than a property company. Does he agree that, when the Government launch their new energy policy, based on opening drift mines in whatever part of Britain, it should be based on an alternative similar to Tower, or perhaps comparable to Network Rail, and that they should not simply hand out money to a property company to shut pits and develop the land?

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I agree. That point was powerfully and repeatedly made this morning. There is a case for an alternative way forward that is not based on the existing UK Coal because of all its disadvantages.

What about the ugly tips that have disfigured our valleys and hills? The land is recovering and regaining its natural beauty. Surely no one wants to recreate the industrial wasteland and the scars of industry. Yet, again, with modern mining technology of various types, one can return the waste underground. Advanced landscaping techniques mean that the impact on the environment is minimised and can even be better when the mines have reached the end of their life. The discharge pipes for methane gas are a characteristic feature of many coalfield areas. Yet now methane gas can be harnessed for electricity generation.

"But, for goodness' sake", say some, "You can't have coal burning power stations and achieve our carbon emission targets. It's bonkers to pretend otherwise." To think in that way is to have slept through the advances in technology in recent years. As a former Energy Minister neatly put it:

"Coal can be part of the environmental solution instead of part of the problem."

Photo of Jeff Ennis Jeff Ennis Labour, Barnsley East and Mexborough

Does my hon. Friend recall that, in the early 1980s, this country led the world in clean coal technology, through the fluidised bed plant at Grimethorpe colliery power station in my constituency? That plant was funded by more than 20 countries, including America and Japan. Unfortunately, the facility was closed down by Mrs. Thatcher. Does he agree that this country continues to regret that decision to this day?

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

Indeed, and I am sure that all Members here will agree that we want to regain that lead in clean coal technology to take us forward through not only the next few years but the next few decades. The export potential is massive, but it will not happen without investment and prioritising clean coal and carbon abatement technology.

We know that, by 2015, at least half the UK's coal-fired generation plants will close because they have failed to meet EU emission targets. These older technology plants generate 32 per cent. of our electricity needs and as much as 45 per cent. at peak times. We talk about nuclear power, but the closures are going to coincide with the decommissioning of the existing old nuclear power stations, which themselves provide one fifth of UK electricity. With the best will in the world, renewable energy and even a resurgence of modern nuclear power will not fill that energy gap. Clean coal technology, based on securely sourced UK coal, is not just desirable but essential if we are to meet our energy needs.

Energy security is becoming a greater issue in the UK every day, especially as our reliance on overseas supplies grows. The Government's own figures show that 70 per cent. of the UK's energy needs will be supplied by gas by 2020, and that 90 per cent. of that will be imported. That will make the UK extremely vulnerable to disruption of supply and it is vital that we have an indigenous capacity for energy creation from a variety of sources, including renewables, clean coal technology and—well, who knows? I think nuclear power deserves a separate debate all of its own. Let us wait and see.

Photo of Edward Balls Edward Balls Labour, Normanton

Does my hon. Friend agree that short-termism is the biggest enemy of indigenous coal production? If we can adopt a long-term approach to energy policy, to security of supply, to carbon sink technology and to coal generation, we shall have a chance of at last attracting long-term investment in the production of indigenous coal.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I entirely agree. We need a portfolio approach and the ability to make long-term decisions, based on the fiscal measures that are in place not just for five years but for 10 or 20. The energy suppliers and generators—the people who will invest in this technology—need the security of knowing that they can make those long-term decisions.

I am pleased that the DTI has recognised that clean coal and related technologies have a role to play, as have the Welsh Assembly Government. But the Minister must recognise the concern from the National Union of Mineworkers, Amicus, Tower and others that the investment in clean coal technology is less than it should be. There should be more. The USA has led the way in this regard, investing significantly in gasification technology and, to a lesser extent, carbon capture. China has undertaken retrofit programmes on several power plants and is experimenting with gasification. My argument to the Minster is that we have a golden opportunity to develop a UK lead in this market and to export our technology worldwide—I know that he realises this—but it could so easily be missed through under-investment.

On 14 June 2005, the Minister said:

"Reaching our ambitious target of cutting carbon emissions by 60 per cent. by 2050 means action now to support emerging technologies that will enable us to burn coal and gas more cleanly."

He was absolutely right and we need to know the scale of that investment. Nick Otter, the director of technology and external affairs at Alstom Power welcomed the

"willingness of the UK to take a portfolio approach to the reduction and management of carbon dioxide at the heart of climate change."

Andrew Davies, economic development Minister in the Welsh Assembly Government, also recognises this potential in the "Energy Wales" consultation document. He notes that south Wales is a net importer of energy, which is remarkable in the light of my earlier comments on the reserves of good-quality coal in the south Wales coalfield. He said:

"Security of Energy supply requires us to continue to ensure a diversity of fuel supplies which means pressing for the development of cleaner coal operations and the eventual carbon capture for the carbon dioxide emissions of fossil fuelled stations generally."

In Wales, therefore, a review is under way. A coal technical advice note is to be developed for 2006, and there is a will to put in place a demonstration gasification project by 2010. Wales has a key strategic role to play.

The Uskmouth power station in Newport already utilises flue gas desulphurisation—FGS—and is one of the cleanest plants of its size in the UK, and the necessary consents to fit FGS to Aberthaw have been obtained. Those retrofitted devices are a great improvement—they achieve carbon savings of 15 to 20 per cent.—but newer, purpose-built, cleaner plants must be the longer-term solution.

Photo of Jessica Morden Jessica Morden Labour, Newport East

I recently visited the Uskmouth power station, which is in my constituency, and the company reiterated that they want to develop their use of clean coal technology. But as new technologies are often unproven, banks are unwilling to lend the money and take the risk with new projects. I am sure that my hon. Friend agrees that we should offer more support to industries to prove these technologies in the long run.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

The point is well made: long-term support, and the clarity of that support years ahead, is vital.

On other aspects of technology, one prime example is conversion or pre-combustion technologies such as gasification—turning coal into a gas or liquid that can be cleaned and used as fuel. That is the cleanest of all coal-based electric power technologies, with lower air emissions, solid wastes and waste water. Moreover, it has far higher efficiency, using less coal to produce the same amount of energy, thereby leading to lower CO 2 production. Clearly, that is the way forward.

Concerns have been expressed about the disposal of carbon, yet the technique of carbon capture linked to sequestration appears to have immense potential, which is why BP and its partners started injecting CO 2 last year into the In Salah gas fields in Algeria. The technology exists. In the US, oil producers are paying electricity producers for their CO 2 for that very reason, because it helps them pump out more oil from their oilfields. It is a win-win situation, and BP estimates that reservoirs in the North sea have the capacity to store more than 60 years of the CO 2 produced by all the power stations in Europe.

The Minister will know that one key aspect affecting viability, on which a couple of interventions have touched, is long-term planning, and availability of credits under the EU emissions trading scheme is critical to that. That was discussed in the earlier debates today. Perhaps the Minister will comment on that, and on the much-anticipated report on carbon capture and storage by the intergovernmental panel on climate change.

When the men and women of Tower colliery in south Wales, and their wives and families, took their futures into their own hands and made that pit work, they had to fight against the management, the Government, and against the odds. They were proved right then. They are equally right now. There is a future for coal in Wales and the UK, a future based on economically viable mining, energy security and cutting-edge clean coal technology.

Cwm, Coedely, Brynlliw-Morlais, Blaenant, Treforgan, Penallta, Taff Merthyr, Mardy, Lady Windsor—coal has a great past, but also a great future. It is for us and the Minister, with the support of the coalfield MPs, to carve out that future together.

Photo of Malcolm Wicks Malcolm Wicks Minister for energy, Department of Trade and Industry 7:34 pm, 12th October 2005

I congratulate my hon. Friend Huw Irranca-Davies on securing this debate tonight. It is encouraging to have so many hon. Friends behind me, but also slightly scary. It might be an accident of parliamentary timetabling that we have had three debates on energy—two in Westminster Hall and one in the Chamber—as well as the climate change debate today. It is not entirely a coincidence, however, that there is a growing interest in energy policy and futures in the United Kingdom. I note that although the Labour Benches are packed, the new alliance on climate change between the Conservatives and the Liberal Democrats is clearly taking place elsewhere. Any suggestion, moreover, that the nationalists have an interest in this issue is also a point that we might want to debate.

My hon. Friend spoke eloquently about his concern at the decline of the coal industry in south Wales, and he spoke enthusiastically about the potential impact of new technologies on the future prospects of the coal industry. I want first to address his concern about the present and immediate future of the UK coal industry, and then to look further ahead to the exciting potential role that new technologies can play in making coal a part of a low carbon future.

Currently, there are three deep mines in south Wales. My hon. Friend spoke about the Tower colliery, which employs 375 people and produces some 600,000 tonnes of coal per year. I hope to visit that colliery next week. Work is in progress to re-access viable reserves at Energybuild's Aberpergwm colliery. If this project is successful, the mine should employ some 178 people and produce about 300,000 tonnes of coal per year by 2008. There is also one surviving micro-mine, which is a two-man operation.

Both Tower and Aberpergwm have benefited from coal investment aid. Tower was awarded £2.22 million in application period 1, and as my hon. Friend noted, I announced today that it has been awarded a further £842,000 in application period 2, making a total of more than £3 million. That is a significant sum, and Aberpergwm has also been awarded a total of £3.5 million. These awards will help both mines to meet the cost of investing in projects that are supposed to be completed by the end of next March. However, if progress is slower than expected, payments will continue until the award is exhausted.

The aim of coal investment aid has been to support investment projects in order to maintain access to viable reserves, and to protect mining employment to 2008. Regrettably, at that point Tower is expected to reach the end of its working life, but we hope that the new mining project will progress according to plan. I am advised that it should continue to produce coal and to contribute to local energy needs until at least 2015.

In addition to these deep mines, south Wales currently has seven working surface mines. They employ some 390 people and produced 1.6 million tonnes of coal in 2004. Continuing supplies of coal from both deep and surface mines will be essential in maintaining security of energy supply in south Wales for the foreseeable future. They are particularly important to Aberthaw power station, which remains a vital source of electricity for local domestic and industrial consumers.

My hon. Friend listed a number of locations where coal has been worked in the past, and which may still hold viable reserves, whether for deep or surface mining. Recent changes in the international coal market may help to make them more commercially attractive to potential operators, and it would be good to hear of un-worked reserves being brought into production. For that to happen, they would of course need to meet the terms of planning legislation provisions, in order to ensure that the potential environmental impact of coal working can be managed, or offset, to meet the reasonable concerns of local communities.

I turn now to the future. I share my hon. Friend's enthusiasm for the opportunities that clean coal technologies could provide in respect of the UK's energy mix. Of course, this issue is of wider international note. At the recent EU-China summit, an announcement was made about clean coal technology in China. As colleagues know, given the number of coal stations that will be built in the years to come, the role of clean coal technology in China will be crucial if our international environmental climate change objectives are to stand any chance of being met successfully.

It is clear that if these technologies can become competitive in the UK in the next 10 to 15 years, they can contribute successfully to our energy White Paper target of reducing carbon emissions by 60 per cent. by 2050. But of course, we must recognise that even if we successfully develop cleaner coal technologies, it does not necessarily follow that we will use British coal exclusively. Today, coal is an internationally traded commodity, and good quality, competitively priced coal is available from abroad. Thus clean coal technologies are not necessarily the saviour of the British, or indeed the Welsh, coal industry, although I would hope that they would be a significant factor in helping our industry. The key is that British coals need to compete effectively with other sources from abroad.

That said, the key challenge is to develop the technology to deal with the fact that at the moment coal is about twice as polluting as natural gas. How should we go about that? While it should be industry rather than the Government that identifies and brings the most appropriate technologies to market, we also recognise that the Government have an active role to play to stimulate that. That is why I announced back in June the publication of our carbon abatement technology strategy for fossil fuel use. As my hon. Friend mentioned, I also announced a package of some £40 million in capital grants for demonstration projects covering carbon abatement technologies, hydrogen and fuel cells. About £25 million of that has been specifically allocated to demonstrating carbon abatement technologies.

Officials in the Department are currently working up this scheme and we expect to be able to announce more details early next year. In the meanwhile, they are taking forward the other activities identified in the carbon abatement technology strategy, such as the development of a technology road map so that we can focus on those technologies that we need to develop for coal and other hydrocarbons to have a sustainable future.

It is already clear that a number of technologies can be developed to reduce carbon emissions. The most radical solution is carbon dioxide capture and storage, which can reduce emissions by about 85 per cent. For it to be commercially viable, the impact of capture on plant efficiency has to be reduced—as do the costs—we estimate that it will be some 10 to 15 years before we reach the point at which they will be commercially viable. That is why we are placing short-term emphasis on improving the efficiency of plant.

As well as providing development and demonstration funding, we are also tackling the other barriers blocking the route to market for these technologies. The Chancellor recognised in his Budget statement that CO 2 capture and storage has the potential to reduce carbon emissions from fossil fuels. As part of the climate change programme review, we are investigating what can be done further to incentivise the take-up of those technologies. We are also working with our European partners on how to enable CCS to qualify for carbon credits under the emissions trading scheme. All those activities and many more form a work programme that was set out in the carbon abatement technologies strategy—work that I expect to lead to an environment that will enable the technology to become a reality.

In the North sea, colleagues will note the BP project in the Miller oil field where it is planned to return carbon dioxide back to the North sea fields, enabling more oil to be produced. In addition, there is the BP work in the Salah gas field in Algeria. Around the world, there are bits of technology and good practice that we can draw on. We are very supportive of all those projects, as their success will provide encouragement for similar projects and lay the foundation for the take-up of new, cleaner fossil technologies.

We have had debates today on coal and energy policy. On a wider note, the House will know that we will shortly be announcing the details of our energy review, as highlighted by my right hon. Friend the Prime Minister in his speech to the Labour party conference in Brighton. My right hon. Friend has said that he wants energy policy recommendations to be made by next year. That shows his emphasis on energy policy, and the urgency that he attaches to a range of issues to do with climate change, geopolitical developments, energy supply and other matters.

In addition, my right hon. Friend the Chancellor has announced a review of fiscal measures relating to climate change, and the Department for Environment, Food and Rural Affairs has also initiated a climate change review that will report by the end of the year. That shows that we have in place—or will have in place very soon—the necessary analysis and research that will enable us to think through a variety of difficult issues. That will help us to fulfil our aim of relating our concerns about the planet and climate change—surely the ultimate public good—to our concerns about energy supply, and to the social policy aspects of matters such as fuel poverty.

Within that review process, we must of course look at the future of coal. Therefore, the House will have every opportunity to debate issues that are vital to the people of Wales, Scotland and England, and to the future of energy policy in the UK.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Eight o'clock.