House of Commons Welsh Affairs Committee Energy in Wales: follow-up inquiry First Report of Session 2007–08 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 11 December 2007 HC 177 [Incorporating HC 221-i-ii, Session 2006-07] Published on 17 December 2007 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Welsh Affairs Committee The Welsh Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Office of the Secretary of State for Wales (including relations with the National Assembly for Wales). Current membership Dr Hywel Francis MP (Labour, Aberavon) (Chairman) Mr Stephen Crabb MP (Conservative, Preseli Pembrokeshire) Mr David T.C. Davies MP (Conservative, Monmouth) Ms Nia Griffith MP (Labour, Llanelli) Mrs Siân C. James MP (Labour, Swansea East) Mr David Jones MP (Conservative, Clwyd West) Mr Martyn Jones MP (Labour, Clwyd South) Rt Hon Alun Michael MP (Labour, Cardiff South and Penarth) Mr Albert Owen MP (Labour, Ynys Môn) Mr Mark Williams MP (Liberal Democrat, Ceredigion) Mr Hywel Williams MP (Plaid Cymru, Caernarfon) Jessica Morden MP was a Member of the Committee during the inquiry. Powers The committee is one of the Departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliamentary_committees/welsh_affairs_committee.cfm. A list of reports of the Committee in the present Parliament is at the back of this volume. Committee staff The current staff of the Committee is Nick Wright (Clerk), Llinos Madeley (Committee Specialist), Christine Randall (Committee Assistant), Annabel Goddard (Secretary), Jim Lawford (Chief Office Clerk) and Rebecca Jones (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Welsh Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6189 and the Committee’s email address is [email protected]. Energy in Wales: follow-up inquiry 1 Contents Report Page Introduction 3 1 Coal production in Wales 4 The world price for coal 4 The market for coal in Wales 4 Security of supply and the importation of coal 5 The “generation gap” 6 The economic importance and environmental impact of open cast mining 7 The preservation of areas of ancient woodland 10 The extraction of coal bed methane 11 The Mines Rescue Service 11 The collection of below-national level data 12 2 Alternative technologies and microgeneration 13 Microgeneration strategies 13 The Wales Institute for Sustainable Education (WISE) project 14 3 The Severn Barrage project 16 4 Conclusion 20 Conclusions and recommendations 21 Formal Minutes 23 Witnesses 24 List of written evidence 24 List of Reports from the Committee during the current Parliament 25 Energy in Wales: follow-up inquiry 3 Introduction 1. The Report of this Committee’s major inquiry of Session 2005-06, Energy in Wales, was published on 20 July 2006.1 Although open cast mining was not considered as part of that Report, we noted that “should open cast mining in Wales be extended further, an in-depth assessment of the environmental impact of that process would be worthwhile”.2 Following representations by the Opencast Coal Committee of Wales as well as by groups opposed to such development, we decided to conduct a short follow-up inquiry looking at the future for coal production in Wales and its economic, social and environmental impact. As part of this follow-up inquiry we also heard evidence on the development of sustainable technologies and on measures to encourage microgeneration. 2. We thank all those who submitted written and gave oral evidence. In addition, in May the Committee invited a presentation on the case for a reappraisal of the proposed Severn Barrage project. We thank Roger Hull and colleagues representing the Severn Tidal Power Group for their presentation. 1 3rd Report from the Welsh Affairs Committee, Energy in Wales, HC 876-I of Session 2005-06 2 ibid, para 71 4 Energy in Wales: follow-up Inquiry 1 Coal production in Wales The world price for coal 3. After many years in which coal mining in Wales has been in steady decline, the rise in the world price for coal has meant that coal mining operators are taking commercial decisions which clearly indicate their belief that coal has a viable future. As the Parliamentary Under-Secretary of State for Energy told us in evidence: … as the price of coal goes up, increasingly businesses will look to areas of former pits to see whether they are viable in terms of reopening them ... We are at that point where the price has risen to such a point which makes some of these developments economic, whereas they previously were not.3 4. The Minister continued: “overall the prospect for coal in Wales does look good”. 4 The mine operators who gave evidence to us also saw a positive future for coal in Wales. The Chairman of Unity Power Plc, Mr Gerwyn Llewellyn Williams, told us that “When we talk about coal in Wales I think we totally underestimate the resource there is ... There is a good future for deep mining in the reserves we have already quantified”.5 Mr Poyner, Director of Miller Mining, told us “We have always believed that there is a future for coal in Wales. Whether it is a good future depends on continuity of access to the coal reserves and the market conditions”.6 5. We share this positive assessment, and agree with the conclusion of the Government’s Energy Review that: ... it is right to make the best use of UK energy reserves, including coal reserves, where it is economically viable and environmentally acceptable to do so.7 The market for coal in Wales 6. The domestic market for coal in Wales is shrinking, with “limited scope for further development”.8 The remarks in this Report are therefore confined to the production of coal in Wales intended for industrial use, primarily at Wales’s two coal-fired power stations, Aberthaw and Uskmouth. The potential for introducing coal into coke-making and blast furnace injection at the steelworks at Port Talbot, which was under discussion at that time, was also referred to by representatives of the mining companies.9 The Chairman of Unity Power, Mr Gerwyn Llewellyn Williams, told the Committee that he also believed there to 3 Q 21 4 Q 2 5 Q 122 6 ibid 7 The Energy Challenge, Energy Review, DTI, July 2006, CM 6887, para 4.23 8 Q 12 9 Q 128 Energy in Wales: follow-up inquiry 5 be a role for smaller, modern coal-fired generating stations to be built, “strategically placed throughout South Wales”.10 7. RWEnpower has recently opted into the Large Combustion Plants Directive and is retrofitting flue gas desulphurisation to meet the deadline of implementation of the Directive in January 2008.11 Although Aberthaw Power Station was specifically built to burn the type of coal with the characteristics that can only be found in the South Wales coalfield – Welsh dry steam coal – because Welsh-mined coal has a higher sulphur content than that of imported coal, the advent of the Directive requires Aberthaw to use a blend of Welsh and imported coal.12 The lower sulphur content of the imported coal helps generators to meet their emissions targets.13 However, the fitting of flue gas desulphurisation equipment can overcome the comparative disadvantage of the higher sulphur content of Welsh coal, although using Welsh coal increased the cost of applying this technology.14 8. Seventy per cent of Wales’s annual coal consumption is through the two coal-fired power stations at Aberthaw and Uskmouth.15 RWEnpower, which owns Aberthaw, told us that 40 per cent of Aberthaw’s coal burn is made up of supplies from Tower, Celtic Energy and Energybuild, with the remaining 60 per cent imported from Russia, Australia and South Africa.16 Clare Harding of the DTI’s Energy Technologies Unit told us: ... clearly with demand for the generating sector exceeding the total domestic production in Wales, there is a shortfall [from domestic production] and it has to be met by a mix [with imports].17 Security of supply and the importation of coal 9. There are clear economic and employment-related advantages for Wales in Aberthaw and Uskmouth using indigenous supplies of coal. It is also vital for the power stations to have a guaranteed security of supply, something Gareth Jones of the TGWU believed was best achieved by the use of Welsh-mined coal.18 10. However, the view of the DTI was that security of supply did not necessarily require sourcing a larger percentage of coal from indigenous stock. According to Lord Truscott: ... unfortunately in some circumstances UK coal has not been as reliable and as 19 flexible and as dependable as imported coal. 10 Q 123 11 Ev 51 12 Qs 125, 127; Ev 49 13 Q 5 14 Q 5 15 Q 4 16 Ev 93 17 Q 5 18 Q 94 19 Q 5 6 Energy in Wales: follow-up Inquiry 11. On the environmental cost of importing coal, Clare Harding of the DTI told us: ... the actual environmental cost of shipping is not as high as you might envisage and ... the carbon cost is not significant.20 However, the environmental cost of using imported coal is not simply a calculation of its transport; as Clare Harding also mentioned, the environmental impact of its extraction – possibly by a less well-regulated process – should also be considered: If you rely increasingly on imports ..