§ Mr. John Grogan (Selby)
I am proud to represent the largest remaining coal mine in the United Kingdom, the Selby complex—[Interruption.]
§ Mr. Deputy Speaker (Mr. Frank Cook)
Will right hon. and hon. Members leave the Chamber quietly, please, so that we can continue with our business in the proper fashion?
§ Mr. Grogan
Thank you, Mr. Deputy Speaker.
I am proud to represent the Selby complex, which is the largest remaining coal mine in Britain. The Government have a creditable record on dealing with coalfield issues and the coalfield communities since 1997, when they came to office. Sometimes it has taken passionate debate in Parliament and elsewhere to bring that about, but that is how it should be. The Government have been responsive to arguments made by coalfield communities and MPs about justice. They have dealt with the legacy of decades of coal mining and its effect on our communities; the legacy of the strike of the 1980s; and issues such as implementing the largest ever compensation scheme for industrial disease. Only last week, they recognised for the first time the special needs of the poorest mining pensioners and their families and are making special provision for them. They have dealt with those who were unfairly victimised in the aftermath of the strike and, just before Christmas, they ensured that those people have proper pension arrangements. They have also dealt with the major issue of the regeneration of coalfield areas through the Coalfields Regeneration Trust and other mechanisms. That is a proud record indeed.
As well as offering justice, the Government have ensured that the coal industry has a part to play in Modern energy policy, not out of sentiment or respect for the past, but out of sheer economic need and necessity. In 1997, when the Government came to office, there was a widespread feeling that coal was discriminated against and that gas was favoured by market arrangements. Measures were taken, including new electricity trading agreements, a moratorium on gas-fired power stations and, latterly, the introduction of subsidies. That big move from the Government ensured the survival of much of the British coalfield. I understand that the latest figure for subsidies paid is more than £130 million; the Selby coalfield in my constituency has got more than £140 million in subsidy arrangements. There can be little doubt that without those subsidies Britain's coalfield would probably be about half its remaining size. That is a record to be proud of.
Essentially, I want to make four points. I know that a number of hon. Members representing coalfield areas want to speak on particular issues; the future of the Prince of Wales colliery, for example, will be mentioned by some of my hon. Friends. I wish to underline the continuing importance of coal nationally and internationally. When I was preparing for this debate in the Tea Room yesterday evening, one of my hon. Friends from the south of England looked at me and said, quite seriously, "You mean there is still a coal 271WH industry?" Internationally, 40 per cent. of all electricity is still generated by coal; there is no indication that that is likely to change. In Britain, just over one third of our electricity is generated by coal and £1 billion of our national income depends in some way on the coal industry. There are nearly 300 million tonnes of proven reserves of UK coal; BP estimates that perhaps 1 billion tonnes of coal are available for the country's energy needs.
Coal therefore still makes an important contribution to our overall energy pattern and portfolio. Today's debate is taking place against the context of the energy review which, together with the accompanying clean coal technology review, will be published by the end of the month, so Ministers tell us. That is a specific commitment; I am used to being given the commitment that reports will be published in spring, summer or winter, which is a bit more flexible. However, a publication date of the end of January is pretty specific. The energy review is ambitious; the Government are looking at a period of 50 years. Imagine looking in 1952 at this country's energy needs in 2002; the venture is extremely ambitious.
The background papers to the review are worthy of brief examination as they suggest that there has been a stark decline in coal-generated power. Energy Paper 68, which was published at the end of 2000, deals with the projections by the Department of Trade and Industry on different energy prices in the years ahead. Importantly, those assumptions depend on the role that the Government envisage for different energy sectors. A critique emerges from the paper; the Government make fairly realistic assumptions about the price of coal, but they underprice oil and gas, which leads to projections of a steeper decline in coal than is likely. I asked my hon. Friend the Minister for Industry and Energy a written question in December, to which he replied that the oil price projections in Energy Paper 68 were above the range for 22 of the past 24 months. I therefore urge Ministers to look carefully at assumptions in the energy papers.
In addition, some of the papers come to frightening conclusions about the country's likely dependence on imported energy in future. According to those assumptions, by 2020, we will be 70 per cent. dependent on gas, 90 per cent. of which will be imported; similar projections were made by the European Commission. How robust that gas supply would be is open to question; only a few weeks ago, the Confederation of UK Coal Producers issued a report, commissioned by the respected risk analysts, the Control Risks Group, which pointed up possible terrorist threats to gas pipelines. However, terrorists do not pose the only possibility of blackmail; there is also a possibility of economic blackmail. If we go down the gas route, we will be in a similar position to the one that we were in the 1970s, but instead of the oil industry holding us to ransom, it will be gas. The head of the Russian gas monopoly, Gazprom, which will be one of our largest gas suppliers in that scenario, recently said:It is necessary to create a body which will group countries exporting natural gas, a body that would exercise real concrete regulation of prices.He continued,Everybody should get together to pool their ideas and come up with … an agreement about the way we should behave on the market instead of each exporter doing his own thing.272WH That is the threat that we would face. It is worth recalling that at the moment, contrary to projections in Energy Paper 68, coal burn is increasing in coal-fired power stations and went up last year. PowerGen recently announced plans to reopen coal-fired power stations, so there is a role for coal.
Some people question whether that coal needs to be British, and ask whether some of it could be imported from the international market. There are early signs that that market is tightening; China, for example, is importing coal for the first time. Much Colombian coal, which flooded on to the market some years ago, is now tied up in contracts with the United States. We should never forget one advantage of coal, which has become all too apparent in the past few years in our energy markets; coal-generated power can follow the load in the electricity market. It is much easier to increase and decrease the volume of power according to market fluctuations with coal than with renewables or nuclear power. That advantage has become particularly apparent in the workings of the market in recent months.
I wish to examine in a little detail the subsidy arrangements to which I referred earlier. The treaty establishing the European coal and steel community, a feature of European policy since the 1950s, expires towards the end of July 2002. The treaty was designed to expand coal mines. In the aftermath of the war, mines were sunk in the 1950s in many parts of Europe. However, since the 1950s, the European coal and steel treaty has largely been a vehicle for subsidising an industry that has been in decline.
I have explored the issue to some extent with my hon. Friend the Minister for Industry and Energy in various exchanges in the House. In European Standing Committee C in November, he said:As I have said in the past, if a successor coal regime is introduced in the EU, we will not allow our industry to be put at a relative disadvantage, on principle. However, our stated position is our starting point in the discussions and if another state aid regime is agreed to, we will reluctantly subscribe to it and it will then be part of the scheme to which we have subscribed."—[Official Report, European Standing Committee C, 28 November 2001; c. 8.]My plea to the Minister on that occasion and subsequently is based on many years of supporting Bradford City, mainly in the lower divisions. It is simply to get stuck in. To be fair, I believe that he has done that.
Although a coal subsidy scheme is subject to veto, all the signs from Europe point to discussing such a scheme in the Industry Council and the European Parliament by the spring. Parliamentary written answers since November suggest Government awareness of that. It is in our interests to shape the scheme because we shall probably have to live with it until 2010.
In the original proposal from the European Commission, there were three grounds for subsidies by member countries under the new regime: to safeguard resources; to cover reduction of activity, and to cover exceptional costs. It is not clear that, for example, subsidies for investment will be allowed under those criteria. My hon. Friends will go into detail about the Prince of Wales colliery, but investment has clearly been important in that crisis.
There has been much speculation about nuclear power and the need for a great deal of public investment if we were to go down that road. Surely there is a case 273WH for subsidy arrangements for opening new coal faces or even new mines. We should try to include that in the European instruments that will be introduced later this year.
There is a more immediate problem. Any new treaty will not take effect until later in the year. National Governments will have to design their schemes; France, Germany and Spain have already said that they will do that. There will be a transitional period because the schemes will have to be approved by the European Commission and are unlikely to be in operation until next year. The transitional period will probably last for six months from July.
The other European coal producing nations have announced that they will apply to the European Commission to roll forward existing schemes for another six months. Given the Minister's remarks in the European Standing Committee about not wanting Britain to be at a disadvantage, I hope that the Government will seriously consider doing the same. If we do that, it would be logical to lift the cap of £75 million, which applies to payments to any coal producer because the figure relates to a specific subsidy scheme that ends in July.
It is worth comparing the scale of subsidy in other European countries with that in Britain. In 2000, the last year for which clear figures are available, approximately 6 billion ecu of aid was given in Germany. In France and Spain, the figure was roughly 1 billion ecu each. By contrast, the figure for the United Kingdom was approximately 142 million ecu. The scale of subsidy was much smaller in the United Kingdom.
There is a message in all that for UK Coal, the major coal producer. If we are to have further subsidy arrangements, it must specify what precisely it offers the coal industry. There is more than a suspicion that UK Coal plans to concentrate production in fewer pits with more intensive working—possibly 24-hour working—and to move miners from pits that it closes to those that it decides to work intensively. UK Coal is paying reasonable dividends at the moment, no doubt to ward off takeover. If it seeks a subsidy to maintain the coal industry and invest in it, it must specify what is on offer.
The 1997 Department of Trade and Industry review said that the pit at Selby could last until 2009. It is not clear that that will happen on UK Coal's current investment plans. However, without going into detail, there are possibilities of further investment in work in Selby and elsewhere. UK Coal should be more forthcoming about that.
§ Mr. Harry Barnes (North-East Derbyshire)
I compliment my hon. Friend on obtaining such an important debate. Unfortunately, I do not have the constituency interest that I used to have in subsidies for coal mining. There is only a small mine in my constituency, in Moorside, that employs 29 people. However, small mines sometimes have difficulty getting into the subsidy regime. They have problems in organising their submissions and the rules of the schemes sometimes make it difficult to get on to them. 274WH I hope that that is taken into account when new systems are developed in Europe. It is important for the people who depend on coal for their livelihoods.
§ Mr. Grogan
My hon. Friend makes a valuable point that reinforces the need for the British Government to be at the negotiating table at all stages to take care of the interests of small mines.
I want to consider clean coal technology. The latest figures that I have seen show that CO2 emissions have been stable since 1997. They are no longer in decline, and the Government and the coal industry must tackle that. I shall make one or two suggestions about that. Sulphur dioxide and nitrogen dioxide emissions are close to being sorted out. One of the successes of the past few years is the expansion in the number of companies that are introducing new flue gas desulphurisation plants. Eggborough in my constituency is an example of that. Such technology was considered unlikely given the dynamics of the market three or four years ago, but it has happened.
We must deal with CO2 emissions. The clean coal technology review is most welcome. Ministers have generally supported clean coal technology. In July 1998, the then Minister with responsibility for energy stated:Clean-coal technologies have an important part to play … We are keen to support cleaner coal technologies."—[Official Report, 22 July 1998; Vol. 316, c. 1081–2.]In November 2000, the successor Minister said:Several hon. Members have raised the issue of cleaner-coal technology … We are conducting an analysis and will do so in even more detail as we proceed with examining the technology."—[Official Report, 22 November 2000; Vol. 357, c. 405.]Lord Sainsbury spoke in a debate on clean coal technology in the other place before Christmas. His words suggest the likely content of the clean coal technology review. I make a plea to Ministers not to neglect existing coal-fired power stations. Without going into detail about the technology, the super-critical boilers can be retrofitted to existing coal-fired power stations. That could save up to 20 per cent. of CO2 emissions. Such a step could be taken quickly, given that those power stations will be with us for many years, whatever the policy.
I shall paraphrase Lord Sainsbury's argument, which appeared to be that some clean coal technologies such as gasification and super-critical boilers are used overseas and that there is therefore little need for a demonstration plant. However, he said that other clean coal technologies such as carbon capture and pumping CO2 into oil fields to capture the CO2 and to improve the extraction of oil are in such an early stage that a demonstration plant would not be feasible. I cannot imagine anyone presenting such an argument about renewable plants, which clearly exist in many overseas countries. Much of the technology is speculative, but the Government have made a clear commitment in financial incentives to developing renewables. I hope that they will make a similar commitment in the review of clean coal technology.
Let us consider the scale of what happens in other countries. In America, the Department of Energy contributes $2 billion a year to clean coal. In Japan, the new Sunshine programme means $100 million for clean coal technology. That has to be the future of our 275WH industry. I hope that the review that is coming out before the end of the month will demonstrate that now is the time for some action, after many years of supportive words and comments.
Whatever happens in terms of the energy review, it is inevitable that there will be coal mine closures in the next decade. Some pits will become exhausted. It is a challenge to the Government as to how they deal with that. The closures will obviously be on a much smaller scale than in the '50s or '60s, and, indeed, in the '80s, but this will nevertheless be a real challenge for the communities involved. I hope that it will be a mark of the Government that, where there are closures, they will be planned for and that the necessary investment will be made in skills retraining, and so on.
The official estimate in the Department of Trade and Industry review in 1997 for the closure date of the coalfield at Selby, in my constituency, was 2009. Who knows precisely when it will close? But it will close—I do not know whether it will be in my lifetime as the Selby MP, with a majority of 2,000—although I hope that it will go on for many years. On 22 February we are holding a conference on the future of the Selby economy—I shall provide the Minister with details—and I hope that the Government office will be represented there at a high level. One of our aims will be to work out ways of prolonging the life of the coalfield, but we shall also discuss planning for the inevitable day when it closes.
If the Government are to ease the closures, when they occur over the coming decades, they should look again at pensions. Managers and pit deputies who are made redundant get a pension at the age of 50 under the arrangements made following privatisation. Ordinary miners, however, do not. Those hon. Members, many of whom are present in the Chamber, who have worked in the coal industry, and those such as myself who have been down a mine, will know that miners have a very physical, back-breaking job. In Germany, the pension arrangements on early retirement are much more generous.
If miners in this country were given the same rights as their managers and pit deputies—the right to a pension at 50 if made redundant—it would cost about £99 million, according to the actuaries. The mining pension schemes have been in surplus, but this idea will never be promoted by the trustees of the scheme who are elected by the miners, because those miners are all retired. There are no working miners in the scheme. However, half the trustees are now representatives from the DTI, and it would be open to the DTI to explore the possibility of this change, through those trustees. Putting miners on the same footing as their managers would cushion the blow in communities in which there will be closures in the coming decades.
Coal mining is now a Modern, flexible industry. It is eager to make its contribution to Britain's energy requirements for many years to come, and all that it asks from the Government is fair play. The Government have given it that over the last four years, and it would be a pity—now that the industry faces heavy losses owing to the decline in prices following 276WH 11 September—if they did not build on the achievements of their first term of office to maintain a viable domestic British coal industry.
§ Mr. Deputy Speaker
Order. Hon. Members should call to mind that it is the convention at these sittings to commence the three Front Bench contributions 30 minutes before termination—in this case, at midday. I have five names on the paper, and an additional hon. Member trying to catch my eye, making six in total. I therefore ask hon. Members to bear in mind my admonishment and make their contributions concise, clear and pertinent, and to keep interventions to a minimum—I would prefer to see none at all.
§ Adam Price (East Carmarthen and Dinefwr)
I am grateful to the hon. Member for Selby (Mr. Grogan) for securing this vital debate, and for his knowledgeable and forceful exposition of the case for continued public support for the coal industry. This is a critical time for the coal industry and, unfortunately, we are all aware of rumours about pits that might be about to announce redundancies, and about other mines that might be moving over to a closure plan, thus foreshortening the life of the mine. This is a dreadful shame, particularly considering the social and economic conditions in many of the communities involved.
The Minister has taken a much more expansive, open-minded approach to this issue than has possibly hitherto been the case. This is certainly a Government success story, and I say that as, technically, an Opposition MP. The UK coal aid operating scheme is something of which the Government should rightly be proud. In my constituency, Betws New mine, where my father worked, has received significant support. It should have closed in 1988, and it is a tribute to the work force, the management and the support from the Government that it is still providing good quality jobs-150 faceworkers, earning about £25,000 a year—in one of the poorest communities in the UK. That illustrates the success of the subsidy regime, and shows why hon. Members are keen to see that success built on.
As the hon. Gentleman said, the coal industry is still a significant industry. It employs about 2,000 people in Wales, directly and indirectly. If we compare the level of subsidy in the UK to the 4.6 billion euros that the coal industry in Germany receives, our level of support is very small. Considering that, it is amazing that British coal production is very competitive compared to imports. It would take only a small change in the exchange rate or the global level of coal prices to close the gap.
The arguments for continued support have been well rehearsed. They relate to security of supply. Coal has to play a part in ensuring a diversity of supply in terms of energy needs. We are not just talking about energy needs, however. There are other markets for coal. In my constituency, there is an anthracite coalfield. The only suppliers of good quality anthracite to the UK from outside Europe are China and Vietnam, so there is clearly an issue of security of supply involved.
277WH The point about the social cost to the community of mine closures has been very well made, and we certainly do not want to repeat the travesty of what happened to so many of our communities in the 1980s. If we consider the question in terms of the global net impact on Government revenue, it would be idiocy to close these mines, because the tax take from employment in many of them more than makes up for the cost of the level of support across the industry that we are talking about.
In the coal industry, more than in any other, we have to take a long-term view. I notice that Lord Sainsbury of Turville, speaking in another place yesterday, referred to the short-term factors that were the rationale for the introduction of the support scheme. There are always short-term factors involved in access to reserves in any mine. Hon. Members who have worked in the industry will know that. That is the problem with the coal industry: it has long-term reserves and needs a long-term perspective, but there are short-term costs involved in accessing those reserves. When problems of market failure occur, there is a legitimate role for the Government in helping the industry to overcome issues of short-term costs, to ensure that the coal industry can continue to access the available reserves, probably for the next 50 years.
I was also glad to hear the Minister's remarks about ensuring that we are not at a comparative disadvantage. The point has already been made, however, that we shall be at a comparative disadvantage unless we get at least a short-term extension of the scheme, so that we can have a full debate about designing a regime that is most appropriate for the UK industry's needs. The issue of the company cap has been raised, as has the question of aid, not just operating aid, but investment aid for access to new reserves, and why not? In a very long-term view of the industry's future, a report by international mining consultants, commissioned by the Government in 1998, referred to new mine construction.
The six-month extension to the scheme, which has already been announced in other EU member states, is vital to some of the mines that I know will be switching over to a closure plan. Those who have worked in the industry will be able to explain this better than me, but basically some mines will be looking in the next few weeks for an announcement about an extension from July to December, otherwise they will halt their development plans and start working to a short-term closure plan. I know of mines that have the potential to last another 10 years, but without an announcement their lives will be foreshortened to perhaps two or three years. The issue is critical, as I know the Minister is aware.
It is imperative that the Government show their faith in the coal industry and coal communities. They have a good record on this issue, and we do not want to repeat all the mistakes of the 1980s, do we? The industry has been badly served by successive Governments, and this is an opportunity to build for the future. The last thing that the Government want as their epitaph is that they closed down the coal industry. We must bear it in mind that there are by-elections on the horizon. Let us, together, develop a positive future for the industry in 278WH Wales, where there is a lot for the Government to build on. I repeat: it is vital that we have an announcement on the extension in the next few weeks.
§ Mr. Kevin Hughes (Doncaster, North)
May I start by congratulating my hon. Friend the Member for Selby (Mr. Grogan) on securing this important debate? He made an excellent speech and gave us a grand and detailed tour of the issues. I shall bear in mind your advice, Mr. Deputy Speaker, and concentrate on one aspect of the issues.
My hon. Friend's constituency is just to the north of mine, but a boundary is not the only thing that we share. We both have a deep interest in, and commitment to, the coal mining industry, the people who work in it, directly or indirectly, and of course the communities in which they live. The way in which the last Tory Government ransacked the industry in the 1980s and 1990s was absolutely appalling. They abandoned the people and their communities, leaving a trail of destruction, with little hope of a decent future. However, I do not want to dwell on the past; I want to look to the future. I believe that coal and the people who work in the industry can and should have a prosperous future if we—and by that I mean this Labour Government—grasp hold of the new generation of clean coal technology that is now coming to the fore.
There are serious decisions to be made about our energy supply in the not-too-distant future. We are awaiting the outcome of the performance and innovation unit's energy review, and I understand that it has been submitted to Ministers for their consideration. Whatever that review says, the Government will need to decide what they will do to secure and maintain the supplies to meet our future energy needs. It will be good sense to maintain a broad mix of generation options.
The Government will have to deal with our rapidly depleting indigenous gas supply, the enormous cost of decommissioning the present nuclear capacity and the environmental threat from any new build. They will have to face up to the fact that renewable sources are not and will not for years to come be sufficiently advanced to generate enough power at a reasonable cost. May I warn the Minister that I believe there will be a huge outcry when the public see great swathes of our countryside and seascape blighted by obnoxious-looking, noisy wind farms?
The Government have to grasp the nettle of reducing our CO2 emissions. There are other forms of renewables which are not as environmentally unfriendly as wind farms, and the Government can embrace the new generation of clean coal technology, in which they may well find the answer to many of these questions. Moreover, they will tackle the issue of security of supply. Within the new CCT methods being developed, integrated gasification combined-cycle technology offers us a realistic way forward. Put very simply, and I mean very simply, IGCC plants convert coal to gas and steam, and then burn the gas and utilise the steam to generate electricity. They reduce CO2 emissions, are small enough to be built on colliery sites and produce an inert waste material that can be used in road foundations, among other things.
Let us look for a moment at what we can achieve by using the new CCT. First, the bulk of the coal produced at a mine need not even leave the site, cutting down on 279WH road transport and, in turn, emissions from heavy goods vehicles. Secondly, it reduces CO2 emissions, which will help us to meet our Kyoto targets. Thirdly, unlike other CCTs such as flue gas desulphurisation, there is no need to dig great holes in our countryside to extract limestone. That cuts down on quarrying, which scars the landscape, and again reduces HGV emissions because there is no need to transport more limestone.
Fourthly, the by-product is useful in civil engineering, again cutting down the need to quarry in our beautiful countryside. Fifthly, by using our own coal supplies to greater advantage, we do not have to worry about the security of supply issue. Sixthly, as it develops, CCT may help us to deal with the issue of our depleting indigenous gas supply. If we burn more gas in IGCCs to generate electricity, there will be less need to burn our natural gas supply for that purpose, thereby resolving the vexed problem of our having, in the not-too-distant future, to import natural gas from eastern Europe. Finally, a new life for coal will be created if it is used in this way. It would create new employment opportunities in areas that have still not recovered from the devastation of the Tory pit closures programme of the 1980s and 1990s.
In the round, we start to get the picture that once again coal can play a significant role in our future energy needs. All we need is a bit of willpower and foresight, and together with the coal industry the Government can help to give coal a new life, help to save the environment on several fronts and regenerate communities that were ripped apart by the Tories. In conclusion, I urge the Minister to look closely at all these matters and to take a step into the future with a fuel that we know we can rely on.
§ Mr. Denis Murphy (Wansbeck)
I congratulate my hon. Friend the Member for Selby (Mr. Grogan) on securing this important debate.
The coal industry still plays an important role in my constituency. Ellington colliery, which borders Wansbeck, employs some 450 people, and with an unemployment rate that is still twice the national average, those jobs are vital to the local economy. Ellington, however, was not included in the UK coal operating aid package. It is producing today only because the other collieries in the group are receiving financial aid, thereby freeing much needed capital investment for new equipment, enabling the colliery to continue production.
Coal's contribution and value is recognised widely throughout the European Union. The Commission has allowed member states to subsidise coal for many years. The current scheme, as hon. Members have pointed out, ends this year. I understand that the Commission will soon be recommending a new scheme, which is intended to operate until 2010, to replace the current operating aid. I urge the Government, through my hon. Friend the Minister, to play a leading role in setting the rules of any new financial structures, because any new scheme should certainly encourage investment. If it can be proven that new equipment or even accessing new reserves will improve a colliery's efficiency, financial support should be given. That is exactly the investment required by Ellington to keep it viable for at least the next 10 years, to cover the short and medium terms.
280WH The coal industry's long-term future can be guaranteed only by building a new generation of clean coal power stations, and the Government could assist either by direct grants or by introducing an obligation. Either way, it is important that the current balance of fuels for electricity generation be maintained. Coal, nuclear, gas and renewables all have a role to play, but it is imperative that the UK should not become dependent on gas.
I have nothing against the gas industry—gas is a wonderful fuel. Indeed, it is far too valuable to flare off in huge quantities in gas-fired power stations. In 1990, total UK gas reserves stood at 36 years. By 2000, that had fallen to 14 years, and we shall import 55 to 90 per cent. of our gas by 2020. It is reasonable to ask where that gas will come from: 70 per cent. of the world's natural gas reserves are concentrated in the middle east and the former Soviet Union—areas not noted for political stability—yet oil companies are pressing ahead with projects such as the $35 billion Yamal pipeline from Siberia. If we source our gas there, the UK will be at the end of a long pipeline and subject to high transport costs and possible supply interruptions. We still have a choice and that choice, if we are serious about security of energy supply, is simple: coal from the UK or gas from Siberia.
The thermal efficiency of gas power stations, which is nearly 50 per cent., may look attractive compared with that for coal-fired power stations, which is only about 38 per cent. That comparison pales, however, when the alternative uses for gas are examined closely. Modern domestic central heating boilers can achieve nearly 88 per cent. efficiency and compressed natural gas provides significant environmental benefits in transport. The European Union White Paper on transport policy for 2010 argues that natural gas is the most promising fuel in the medium to long term; so considered against more efficient uses, burning vast quantities of gas at power stations is incredibly wasteful. Coal, however, is abundant and ideally suited to power generation.
In an Adjournment debate that I secured in July 1998, I argued for building a clean energy centre in my constituency. It would be a world first in best practice and would incorporate research and development linked to the region's universities. Newcastle university is a world leader in photovoltaics—the science of converting light to power—and the only offshore wind farm in the UK sits half a mile off the constituency, adjacent to the seven wind turbines, which are also in the constituency, at Blyth harbour.
There is huge potential for offshore wind farms, yet the generating technology is sourced outside the UK. The centrepiece of the new clean energy centre should be a brand new, state of the art, clean coal power station incorporating combined heat and power, which should be set in green parkland. We can show that coal meets the challenges both of efficiency and of the environment.
I see that you have looked at your watch, Mr. Deputy Speaker, and several times at me, so I shall conclude. There is still a huge opportunity for coal. The industry's short term can be protected by lifting the cap on operating aid. The medium term can be secured by the UK's agreeing to implement a new EU scheme. The long-term future can be guaranteed by encouraging the building of a new generation of clean-burn power stations.
281WH By implementing the measures that they have, the Government have shown the value that they put on the industry and the people who work in it. I urge my hon. Friend the Minister to continue his excellent work and his support for Britain's coal industry.
§ Mr. Michael Clapham (Barnsley, West and Penistone)
I congratulate my hon. Friend the Member for Selby (Mr. Grogan). This is an important debate and the number of MPs from coal mining and former coal mining communities who are here shows that. The coal industry is a strategic industry, because on current extraction rates, it could last 200 years, so we must ensure continuity for coal mining through investment and encouragement.
My hon. Friend the Member for Doncaster, North (Mr. Hughes) referred to the size of the coal mix in the UK's energy economy. Members are aware that, in 1993, the President of the Board of Trade referred his cuts to the Trade and Industry Committee, which reported in February and suggested that there was a market for 62 million tonnes of coal. Last year, we burned 59 million tonnes, which clearly shows that the Select Committee got it right, and 62 million tonnes would briefly have retained a mining industry of about 40 collieries.
There is a continuing need for a coal industry, particularly in respect of the dominance of gas, and I refer the Minister to the gas price increase. I suggest that it has been caused largely by UK gas suppliers pushing their gas through the interconnector to Europe and chasing the higher prices there. That pulled UK gas prices in its train, causing the increase. A price fall is unlikely because, in the next two to three years, we shall import gas from the Danish field to feed into our power stations.
Just three power stations are fitted with flue gas desulphurisation technology—another is under construction—but six need to be fitted with it. I hope that the Minister will encourage the owners of that set to fit FGD technology, because it is required. In moving towards new clean coal technology, we must deal with the existing plant and FGD offers one way of doing that.
My hon. Friend the Member for Doncaster, North referred to the new IGCC technology. I think, Minister, that we ought to aim high, and in aiming high we should invest in a demonstration plant. That could put in train a new generating set based on new technology, which would be good for British manufacturing and good for our ability to exchange the technology, particularly with economies such as India's and China's. That, too, would be good for British manufacturing. I hope that the Minister will consider such an investment.
The current coal aid system is restrictive. It operates under the European Coal and Steel Community treaty, which ends this April, but the new European Commission draft is just as restrictive. We need a flexible coal aid scheme and I hope that the Minister will take that up with the Commission. We have to bear in mind how we can aid further development at new and existing collieries and in health and safety technology. We must also ensure that that technology keeps pace with mining technology.
282WH Finally, I urge the Minister to hold a major debate in the Chamber when the PIU report has passed through his office and entered the public domain.
§ Colin Burgon (Elmet)
I too congratulate my hon. Friend the Member for Selby (Mr. Grogan) on securing this debate on the future of the coal industry. He is a staunch supporter of both the industry and those who work in it. Even though he is a Bradford City supporter, his contribution was truly outstanding.
I shall make a short contribution to the debate—I see you nodding your head, Mr. Deputy Speaker. I shall not cover general points but will raise one specific concern.
The Selby constituency now contains more working pits than any other constituency in Britain. Prior to the great miners' strike of 1984–85, my constituency had three pits and one workshop, and was headquarters of the National Coal Board's northern area, which meant that some 3,500 jobs were provided by the industry. All those jobs have now gone. It is estimated that, within the whole of the Leeds district, only some 200 men are left in mining. While I, like many others, am well aware of why that happened, I will never forgive the Conservative party for destroying the industry. It was a wanton piece of vandalism. We must now concentrate our minds on securing some kind of future for coal in Britain.
Rather than go into the general policies that will ensure a place for coal in helping to meet our current and future energy requirements, I shall concentrate on the need to keep open the last remaining pit in the whole of west Yorkshire, the Prince of Wales colliery at Pontefract.
On 3 December, UK Coal announced that work was to be halted on developing a new coal face in the colliery. That move jeopardises the 480 jobs at the colliery. If the pit closes, those, plus another 150 contract workers' jobs, will be at risk, with all the usual knock-on effects. Indeed, Wakefield council estimates a possible loss of some £50 million a year in wages and income, from supplying service industries in the area.
The Under-Secretary of State for Health, my hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), has been energetic in the campaign to prevent closure and has called on UK Coal to keep the pit open. I fully agree with her stance on that. I also agree with the view of the Coalfield Communities Campaign when it called for a new mining plan to be drawn up ensuring the colliery another 20 years of life.
The Prince of Wales colliery has made more than £80 million profit since privatisation in 1995. Unfortunately, it has hit geological problems precisely when UK Coal can no longer call on the current subsidy scheme for assistance. I fully support the view that the current Government aid package should be extended to access new coal reserves. As the Yorkshire coal taskforce has argued, it should be seen as part of a European coal reserve, accessible at a far lower cost base than coal mined elsewhere in the European Union. That would help make the colliery an important asset in accessing reserves, as discussed in the European energy Green Paper.
I hope that the Government will listen to all who argue that they should amend the UK subsidy regime to allow the Prince of Wales colliery to remain open so that 283WH it can contribute to the country's energy needs and the local economy. I know that the Government have done a great deal, as has already been said today. To be blunt, if we did not have a Labour Government, we would not be having this debate.
I am lucky to have friends who work at the Prince of Wales colliery, and I have discussed with them the threat that they face. There is a long history of miners being badly treated, and UK Coal seems determined to continue that tradition. Miners complain of an almost total lack of information. They do not know whether to leave the industry and are convinced that UK Coal is not vitally committed to keeping the pit open. They also suspect that UK Coal wanted to transfer a section of the work force to Kellingly colliery so that it could impose an unpopular four-shift system, so as to fulfil its main aim, the boosting of company profits. I look forward to UK Coal proving me wrong.
On Saturday, I read in the Yorkshire Post that six options are now being considered for the pit. Gary Foreman, the NACODS—National Association of Colliery Overmen, Deputies and Shotfirers—branch secretary, said that there was a prospect of going into a new seam. I hope that that is the case and that the Government will support such a move. I also share the view of Tony Withington, the National Union of Mineworkers branch secretary, that UK Coal should not cut and run, but should show a full commitment to keeping the pit open.
Future generations will look back and judge the privatisation of the coal industry to have been a monumental piece of economic and political vandalism. They will judge the approach taken to a plentiful and reliable energy source to have been profligate and short sighted, and the treatment of those who work in the industry to have been cavalier and thoughtless. Let us hope, in relation to the Prince of Wales colliery, that those judgments will not be sustained.
§ David Hamilton (Midlothian)
Thank you, Mr. Deputy Speaker, for allowing me to speak. I may follow Gary Cooper at high noon in order to meet the 12 o'clock deadline, and I shall therefore make my remarks very quickly.
I congratulate my hon. Friend the Member for Selby (Mr. Grogan) on raising the issue. I also congratulate all my longer established comrades, who have for a number of years been fighting the campaign to try to keep the coal industry in existence. I shall limit my remarks to one or two small points which I consider very important, because the detail has already been argued.
When I started work in the pits at the age of 15, and then went down the pits at 16, the one thing I knew was that at some point the pits would close. I therefore do not look at the coal industry with a great big heart and think that it must be kept at all costs. I was involved in the 1972 and 1974 disputes, which it should be remembered came about because of the price of oil. We were at the beck and call of the middle east.
What hon. Members have said today about expanding the coal industry is right, but I believe that the security of our future energy needs is key to this whole debate. We must go forward in that area. In the short time I have been a Member of this House, we have 284WH had several meetings with the Minister on a host of matters, and his door is always open in order that progress can be made on those matters.
Renewables are a key area for the future. The Minister is well aware of Moncktonhall colliery, which is was one of the deepest pits in Europe and has now been closed. Midlothian council is looking into the possibility of some 4,000 houses being provided with the hot water that has been generated there. Thus an ongoing benefit to the coal industry is stored at the colliery. I invite the Minister to pay the council a visit to see that project for himself.
I wish to discuss two major issues. The first is the fact that the oil and gas industries are finite, although the coal industry has a much longer period before it. There will be major obstacles for nuclear power. Personally, I would oppose nuclear power all the way down the line, not because I am an ex-coal miner but because I think that it is the wrong way forward. Nevertheless, the two industries must compete with each other and also complement each other. If Europe is to survive in the near future, the German, Spanish, French and British coal industries should combine to secure their future. The former Soviet Union and the middle east have major problems—we have only to look at what is happening now. We cannot possibly leave our future in those hands.
With those few comments and with only two minutes to go until noon, I do not think that I have done too badly. Let me make one final comment on pensions. The Minister is to be congratulated on the work that has been done on pensions. Miners' pensions had been victimised, and I hope to see progress on that work very soon.
§ Rachel Squire (Dunfermline, West)
I have just one minute in which to speak. I apologise to you, Mr. Deputy Speaker, and to my hon. Friend the Member for Selby (Mr. Grogan) for being late. I was due to be in a Select Committee, so I had not put this date in my diary. It was only when the title of the debate came up on the screen that I realised it was on.
I very much support what my hon. Friend the Member for Selby and my other hon. Friends have said. I thank all hon. Members present for their support in helping to keep Scotland's only deep coal mine, Longannet, open. Without the support that it has received from my hon. Friends, the Labour Government and particularly the present and previous Ministers for Industry and Energy, that pit would not be open. I very much hope that the Prince of Wales colliery can look forward to a secure future in the months ahead.
I urge the Minister to listen to comments about clean coal technology and how this country could lead the way and boost both the future of coal-fired energy production and manufacturing by exporting our expertise and knowledge to other countries. I hope that we shall be able to celebrate an announcement on, and some funding for, the development of super-critical boilers, for example, and that we will support a diverse energy market.
§ 12 noon
§ Dr. Vincent Cable (Twickenham)
I congratulate you, Mr. Deputy Speaker, on shepherding through all the speakers in the debate in good order. I also congratulate the hon. Member for Selby (Mr. Grogan) on introducing the debate. He spoke effectively on the subject. I grew up on the outskirts of the west of York, a few miles from his pit, so I understand the strength of feeling about this issue and its relevance to the economy of the Vale of York.
Unfortunately, I shall begin by making a slightly discordant comment. Most hon. Members have pitched their remarks on the assumption that the key energy review is on Ministers' desks and is being considered at leisure. Unfortunately, it is already in the public domain. It was referred to in The Independent this morning, and I do not know in how many other newspapers. That is yet another example of the discourtesy shown to Parliament. I do not know whether an official or a Minister leaked the report.
§ The Minister for Industry and Energy (Mr. Brian Wilson)
If I knew how to prevent leaks of the PIU energy report, I would employ a hundred plumbers to do so. It certainly did not come from the Government, and it is deeply against our interests. It has been leaked by people who want to put a spin on it, and not to reflect the overall report.
§ Dr. Cable
I accept the Minister's comment. The report does not help the case of the hon. Member for Selby, because one of its key conclusions, according to that article, is that we needa radical agenda to enable the UK to put itself on the path to a low-carbon economythat is less reliant on oil and coal-fired power stations. That is a bold and brutal conclusion. The implication is that we must quickly debate this report in Parliament. Whoever was responsible for the leak, the issues are out, and the Minister should make a statement this week, so that the matter can be properly debated.
My first point is about the basic economics of coal. For those of us who do not represent coalfields, the issue is how much we are willing to pay as a society to keep open the option of a coal industry, and to keep the skills and technology to stop the coal faces from being destroyed. There is an argument for keeping that option open and for paying something for it as a community. I agree with the hon. Member for East Carmarthen and Dinefwr (Adam Price) that the Government have got the balance right. The current modest subsidies, which are degressive over time, are probably the right approach.
A key uncertainty, which has not been mentioned but which is important to the debate, is the current United Kingdom exchange rate. One reason why the UK coal industry finds it extremely difficult to compete against imported coal, quite apart from other fuels, is the fact that the pound appreciated in real terms by 30 per cent. in 1995, and it has remained at about that level ever since. The British coal industry competes against not just western Europe, but Australia and South Africa. The Australian dollar and the rand have been heavily devalued. To have a proper discussion about how much the industry needs to be subsidised to maintain that 286WH option, we need a clear picture of the exchange rate at which the industry can compete at its present level without a subsidy.
The Secretary of State clearly understands that problem, because she was on the radio this morning talking about the exchange rate in relation to the euro. I do not want to open that debate, but it is essential to the argument. It would be helpful to have an understanding of how much the exchange rate needs to come down to keep the coal industry in business. That is the issue.
My second point is about security of supply, on which I have a little less sympathy with hon. Members from the coal mining belt. When they talk about security of supply, I sense that they are clutching at straws. The brutal fact of the matter is that the British gas supply is much healthier than in the 14 years that the hon. Member for Barnsley, West and Penistone (Mr. Clapham) mentioned. There is constant exploration, new technology, west of Shetland development, and the industry is developing horizontal drilling, which enables it to get not just the oil but the associated gas and to develop new gas fields. The amount of the reserves continues to expand.
Overseas supplies are not as unreliable as has been suggested. According to the article in The Independent, the leaked reports says that there is'little risk' of an international shortage of gas supply".Most of it comes from western Europe—Denmark and Norway—and the former Soviet Union. We tend to forget that the pipeline from the former Soviet Union was built in the days of the cold war, and was one of Mrs. Thatcher's initiatives. She rebelled against Reagan, and insisted that the pipeline be built, which was sensible. It has never been disrupted, and there are now new pipelines and new private sector suppliers. There are at least two pipelines from north Africa, liquified natural gas from the Gulf, Nigeria and Venezuela, and large numbers of diverse supplies.
To argue that those supplies will be disrupted politically is not plausible. The coal industry has a case, but it should not rest it on security of supply. Worse than that, it gives ammunition to the Germans, who are pushing through an unhelpful policy on coal subsidies, which are massively greater than ours, and it damages the case of the UK coal industry. The security of supply arguments are completely invalid and to our disadvantage.
Thirdly, the environmental argument about clean coal is important. I support the idea of investing in research and development for new coal technology. That is a much better use of money than endless operating subsidies. The basic point that must be addressed is about carbon. The hon. Member for Selby rightly said that many of the problems associated with sulphur and nox have been dealt with, so the problem is with carbon. In the past few years, Britain has met its carbon dioxide targets because of the replacement of coal by gas, so how should we address that issue?
I have heard people in the coal industry arguing that it can be dealt with through coal sequestration. Carbon can be pumped into deep reservoirs under the oceans. I do not know how far that technology has evolved, but there is a case for examining it seriously and investing some resources at least in research. I do not know 287WH whether it has reached the prototype stage, but that seems to be the area on which clean coal research should be focused. I would be interested to hear the Minister's view of how that is progressing.
My fourth point relates to Europe. I have always been a strong supporter of British participation in the European Union, but the EU is a disaster in two areas: agriculture and energy. The Government must try hard—it is easy to say that, but there are 15 other member states—to get the energy policy right. At the moment, it works heavily to the disadvantage of UK energy producers, especially the coal mining industry. There is massive over-subsidisation in Germany, and we cannot get an agreement on the liberalisation of gas, which is the real security of supply problem. Ruhrgas can divert gas within Europe. This is an internal, European problem. Until there is an agreement on single market rules, the continental European producers will continue to distort the market against us.
The French continually block agreement on electricity. Electricité de France operates at a cost of capital of a normal nationalised industry, competing against British producers which operate in the market, so companies such as Scottish Power that use coal and are committed to coal have to compete on an unlevel playing field with European producers such as EDF. Until we get a proper, liberalised, fair European market in energy, many of these problems will remain. The Government must give that top priority.
My final comment, Mr. Winterton, is to say—
§ Mr. Deputy Speaker (Mr. Nicholas Winterton)
Order. I am pleased to tell the hon. Member that fortunately a motion went through at the end of last week, and I can now be addressed appropriately as Mr. Deputy Speaker.
§ Dr. Cable
I am sorry, Mr. Deputy Speaker. I had not caught up with the news.
The clock is ticking on energy policy. The report of the energy review has got into the public domain, and I hope that the Minister will say when he intends to bring its conclusions to Parliament so that we can debate them properly.
§ 12.8 pm
§ Mr. Robert Key (Salisbury)
Mr. Deputy Speaker, I shall start by congratulating the hon. Member for Selby (Mr. Grogan) on initiating this important debate. Not only does he represent a quarter of the nation's coal industry in the Selby complex, but he plays a significant role as the honorary secretary of the all-party parliamentary coalfield communities group. I congratulate that group on the submission it made to the PIU review of UK energy policy, which was a good deal more concise than many reviews, and contained much more good sense.
Coal has a future: it is a Modern, rejuvenated industry, as hon. Members have said. The energy industry and the City are investing in coal: they want it to succeed and so do I. Any debate about the future of coal must assume a knowledge and understanding of the history of coal, coal mines and coal miners and the role that they have played in the industrial and social life of the United Kingdom. As a southern MP, I was brought up with stories of the coal mines. My father was brought 288WH up in the Potteries, and his father was the rector of Hanley. There was a mine at the bottom of the garden, and he was regularly down the coal mines. He told me all about it.
This does matter. It is wrong to imagine that just because people live in southern England, they know nothing about coal mines. I do know about them. I first went down a mine in 1976, when I was fighting my first seat, Holborn and St. Pancras. The headquarters of the National Union of Mineworkers was in that constituency.
I also observed the importance of the miners to the whole trade union movement during the 1977 Grunwick dispute, with which I was intimately familiar when I was secretary of a large branch of what was then the Association of Scientific, Technical and Managerial Staffs. I will never forget the impact of the NUM's march to Grunwick through the summer mist with Arthur Scargill at its head, and the sight of him being snatched by police about three feet from where I was standing—much to his annoyance, as he had been pushed through the police picket line by members of the Socialist Workers party. But I must not digress.
From the agony of the 1980s has emerged a small, efficient industry—an industry with a future, if it can survive in the face of heavily subsidised foreign competition, which has already been mentioned. It was a pleasure to hear more from the hon. Member for Doncaster, North (Mr. Hughes) about his campaign against wind farms, and also to hear from the hon. Member for Midlothian (David Hamilton), who spoke of the importance of price stability and pointed out that the industry had already been held to ransom in the past. I feel particularly strongly about that, as my first job was in Musselburgh, and I was very familiar with the mines of which he spoke.
One of our current problems is that the Government, like ducks, are paddling like mad under water and trying to look serene on the surface, while numerous leaks occur and, apparently, reports are delayed. Yesterday, in the other place, Lord Sainsbury of Turville pointed out that the Government had subsidised the industry to a significant extent—£140 million so far—under the coal operating aid scheme. He saidWe currently have no plans to extend it, or to introduce a new scheme beyond July 2002.He mentioned the performance and innovation unit and the clean coal technology review, which we hoped would have been published by now. He said that there would be no more subsidies under the existing scheme, but addedWe are also working to ensure that the new EU regime gives us the flexibility to pay suitable types of aid if appropriate."—[Official Report. House of Lords, 22 January 2002; Vol. 630, c. 1382.]We really do need to start coming clean. It is not fair to the coal industry for there to be so much uncertainty about not just the general approach to the energy review, but specific schemes.
Do leaks matter? They do, but perhaps not as much as some people think. I suspect that the leak mentioned by the hon. Member for Twickenham (Dr. Cable) and reported in today's Independent has a great deal more to 289WH do with the feelgood factor among newspaper circulation managers than with the future of the coal industry.
The PIU report is not important merely as a subject that we will debate. It is crucial for the Government to make their policy clear thereafter. I suspect that when the report goes into the public domain, the Government will say "It is frightfully interesting: let us now talk about it for quite a long time". That is entirely right, but what will matter are the conclusions that they subsequently reach.
If there is anything to be said about the leaks in today's newspaper, it is this. The hon. Member for Twickenham said that reducing the cost of carbon emissions made things look bleak for coal, but, according to The Independent, the PIU proposes to put the United Kingdomon the path to a low carbon economythat would beless reliant on oil and coal fired power stations. But it"—the PIU's leaked report, that is—says that the plan to switch to 'renewable' energy could push up domestic electricity bills by between 5 and 6 per cent.There is another issue, however. Will this lead to the end of any hopes for clean coal technology? That would be a tragedy, and I hope that it will not happen.
There are some questions to which the industry needs answers. As we are seriously constrained by time, I will ask them now. I hope that the Government will address these questions, which have been raised by the industry.
Do the Government recognise the role of coal-fired generation in providing fuel diversity? I believe that they do—the Minister and I have discussed the issue before—but it is crucial for the Government to reassure the industry. A good deal of investment is needed. The industry is also keen to know whether the Government will facilitate the co-firing of biomass in coal-fired plants under the renewables obligation, as has happened in Denmark. Let me add that it is important for the policy review to be completed and then followed by a period of stability in energy, so that we can get down to working out investment strategies in the various sectors of the industry.
Perhaps the main point that should be answered—the Minister will say "Not me, guv"—is that the Government should not gold-plate the environmental controls agreed in Brussels under the revised large combustion plants directive. I know that that is technically a question for the Department for Transport, Local Government and the Regions and the health and safety regime, but there will be a hugely important impact on the coal industry if the directive is unhelpful to it.
The PIU review of the strategic issues surrounding energy policy is set in the broader context of meeting the challenge of global warming, and ensuring secure, diverse and reliable energy supplies at a competitive price. It is terribly important for people to realise that we do not have a true market in energy anywhere in the world. If we did, the rush to gas would continue and the price would fall to a point at which—as has happened in California—no one would invest in new plant, and the 290WH lights would not come on when the switches were pushed. The Government must be careful to avoid that, and I am sure that they will.
The issues of security and diversity are extremely important. We should consider what is in the national interest, and what is in the strategic interests of all the industries involved. Then there are the environmental issues. I was astonished to learn that Greenpeace had made no submission to the PIU review, and that Friends of the Earth did not mention the word "coal" in its submission. It has not mentioned that word in any of its output since 1998, when it was pretty rude about it.
I think it tremendously important for us to allow the Government to support the industry sensibly, not least because it faces massive competition from other European interests. I urge the Minister to go in there and sort out subsidies in the European market and liberalisation of the energy market, particularly in France and Germany. If he can sort that out he will have our wholehearted support, because it is one of the great brakes on a liberalised energy market in this country.
We must encourage clean coal technology whenever we can. We do not yet know the costs involved, because the important paper that has been spoken of has not yet been produced. We look forward to its publication.
Whether we are talking about the treatment of emissions from pulverised fuel combustion or about other examples, such as the hybrid combined cycles which, I believe, have a bright future, we need to ensure that the coal industry is properly treated as part of the country's energy mix. Coal has a future in the energy mix, because it is abundant, capable of storage, can be turned on and off in minutes, is not dependent on unpredictable weather conditions, and can be easily transported by ship, rail or road. Quite minor investment will ensure that coal can continue to meet the UK's baseload energy requirements while new technologies are allowed to develop.
The flexibility of coal makes it an ideal complement to intermittent forms of generation such as wind and wave power. It has an important future, and it has our support.
§ Mr. Deputy Speaker
I thank the hon. Member for Salisbury (Mr. Key) for his contribution. The Minister of State will reply.
§ The Minister for Industry and Energy (Mr. Brian Wilson)
I join my colleagues in congratulating my hon. Friend the Member for Selby (Mr. Grogan) on securing the debate and on his wider work in promoting the interests of the UK coal industry. It has been a useful debate, which has reflected the industry's importance in many parts of the country, and its importance to the nation's energy needs. I will certainly follow up on some of the comments that have been made.
I appreciate the comments about our performance on the coal industry. It is a very interesting and challenging part of my job as Minister for Industry and Energy. We do have a good record. We have managed, for example, to turn around the coal health compensation scheme, which is now working pretty well. There is always room for improvement but the money is getting through, which is what matters. I am pleased that I have been able 291WH to do something about victimised miners and the low pensions issue, and to keep the subsidy scheme operating effectively, as hon. Members on both sides of the Chamber have recognised.
I was particularly pleased to be able to do something about Hatfield when the opportunity arose. I look forward to going there next week for what I am sure will be a happy occasion, when we can also discuss Mr. Budge's ideas for an IGCC power plant, to which my hon. Friend the Member for Doncaster, North (Mr. Hughes) referred. I welcome the comments of all hon. Members about the effectiveness of what the Government have done for the industry, including the comments by the hon. Member for East Carmarthen and Dinefwr (Adam Price).
Coal has a major role. If any Labour Member deep in the south of England does not realise that, they should be sent a copy of the Hansard for this debate. After all, the industry provides over a third of the UK's electricity needs. If current trends continue, coal burn is expected to account for between 10 and 22 per cent. of electricity generation in 2010. Clearly, coal will continue to play a key role in the UK's energy mix for a long time to come.
We have a coal industry to be proud of. It is by far the most efficient in Europe, thanks to the great strides in recent years to improve efficiency and raise productivity. To give hon. Members some idea of that success, in the 1990s, output per head increased by an average of 33 per cent. each year—greater than in any other energy industry, and far greater than the 5 per cent. average for the industry as a whole.
At many of the remaining pits, the prospects are good. The hon. Member for East Carmarthen and Dinefwr mentioned Betws, which is a good example. Lots of reserves are being worked on a relatively small scale, producing highly valuable anthracite for niche markets. We could go through the card. The prospects for a good number of pits are sound.
On the other hand—everyone recognises it—the future is not entirely rosy. For geological reasons, some mines will close in the next few years. Realistically, that cannot be avoided. I return, however, to the positive. Latest statistics suggest that last year coal production in this country rose by over 4.5 per cent. Over 3.5 million tonnes more coal was burned at power stations in 2001 compared with 2000. Over a third of electricity is generated by coal.
Several hon. Members mentioned clean coal technology, particularly my hon. Friend the Member for Wansbeck (Mr. Murphy). I emphasise the crucial significance of that. If we are to secure a truly long-term future for coal, it must be consistent with environmental obligations. CO2 emissions in particular will need to be addressed, given the concerns we all know about on global warming. That is one of the reasons why the Government announced in June that the case for supporting development of cleaner coal technology was being reviewed. A demonstration plant could play an important part in any future role for coal in the fuel mix. It would ensure security of supply while meeting environmental requirements.
In the course of the clean-coal technology review, the scope for capture and storage of CO2, and the need for Government support for that, have been given particular attention. There are potentially exciting 292WH prospects, both for using CO2 to enhance oil recovery from North sea oil wells and to store CO2 permanently underground, a point to which the hon. Member for Twickenham (Dr. Cable) referred. I assure him and other hon. Members that the clean coal technology review will have a lot more to say about that.
The conclusions of the review into Government support for cleaner coal technology will be published later this month. The PIU energy review is expected to be published around the same time. Both reviews will inform a fresh look at how we can achieve our economic and environmental objectives.
A lot depends on those two reviews but I stress, as I always do in these discussions, that the PIU report will be a report to Government, rather than of Government. As the hon. Member for Salisbury (Mr. Key), the Opposition spokesman, rightly said, the debate will begin rather than end with the publication of the PIU report.
Everyone knows why the PIU review was set up and has seen speculation about it but I reiterate the point that the leaking has been in order to secure particular interpretations of the review. Most of it comes from the obsessive anti-nukes. They started off trying to prove that the review was a great whitewash for the nuclear industry, that the devil incarnate was involved and that it was proof positive of that. Then they gave up on that and changed their line. Now they say that it is the death knell of the nuclear industry. Pay your money, take your choice, but my advice is to wait for the PIU review. I think that people will find a balanced report on that issue, as on others. Future policy on coal and energy more generally will be informed by the conclusions of the review.
Everyone has recognised that the UK subsidy scheme has been very successful in achieving what it set out to do. It was designed in 2000 to assist the coal industry through short-term market problems and to prevent a sudden and sharp decline in the coal industry. That has been achieved. Eligible pits have been helped significantly to survive the very difficult price and structural threats that they faced between 1999 and 2001. As a result of that approach, hundreds of jobs have been saved. I welcome the comments of hon. Members on both sides of the Chamber about the success of that approach.
Any pit with a long-term viable future should now be able to survive without Government support. Indeed, the terms of the scheme, as approved by the European Commission, required recipients of aid to be able to demonstrate medium-term viability without aid from July 2002.
As my hon. Friend the Member for Selby and others recognise, we are negotiating to put in place a framework for possible national subsidy schemes after July 2002. Our aim—I repeat what the hon. Member for Salisbury and significantly my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said—is to secure an outcome that will give us the flexibility to put in place suitable schemes, should we wish to do so. The key word is "flexibility". Future policy will be informed by the PIU energy review, the Department of Trade and Industry business support review, the clean coal technology review—like London buses, they come in threes after a long wait—and the House of Lords 293WH reports into security of supply. If the conclusions of those reviews suggest that a further coal subsidy scheme may be appropriate, we will of course consider the issue further. I look forward to discussions beyond this debate with colleagues.
A number of hon. Members have raised the issue of security of supply as an argument in favour of a new scheme. Clearly, that is an extremely important issue, and the overall aim of Government energy policy remains to ensure secure, diverse and sustainable supplies of energy at competitive prices.
Whether there may be security of supply benefits from maintaining a particular level of coal-fired generation is something that we will need to consider in the light of the PIU review and the House of Lords and Select Committee on Trade and Industry reports, but our current position is that, whatever the security of supply issues surrounding coal generation, there are not significant security of supply benefits from maintaining a particular level of UK coal production. As the EU security of supply Green Paper itself notes, the geopolitical diversity of coal sources is such that the risks of disruption to supply are minimal.
§ Mr. Deputy Speaker
Order. Sadly, time is up. I am grateful to the Minister of State for his reply.