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Liquefaction Plant: Ncb Proposal

Volume 415: debated on Tuesday 16 December 1980

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My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they consider that indigenous United Kingdom coal prices are yet low enough (and likely to remain so) relative to those of crude oil to make economically feasible the National Coal Board's proposal to build a £50–65 million pilot liquefaction plant for conversion of coal to oil at Point of Ayr colliery in Wales; and whether they are willing to accede to the National Coal Board's request for a state share in the investment.

My Lords, on the basis of current indigenous coal prices, synthetic oil produced from United Kingdom coal would not be competitive with natural oil. The coal/oil price relativity is, however, only one of many factors relevant to our consideration of the National Coal Board's request for financial assistance.

My Lords, while thanking my noble friend for that Answer, may I ask him whether the Coal Board have given any forecast of likely return on the capital to be invested?

My Lords, I do not think I have that information, but I will see if I can extract it from the department and write to my noble friend.

My Lords, is not the conversion of coal to oil of very great importance for the future sources of power and energy in this country, and should it not be encouraged rather than discouraged?

My Lords, I think the noble and learned Lord misinterprets me. I indeed think it should be encouraged, and for that reason the Government are considering a pilot project in this field. But the terms of the original Question indicate that it is not competitive at the moment.

My Lords, if I may say so, I was not criticising the Minister but the questioner.

My Lords, as the questioner, may I ask my noble friend whether he is aware that the Coal Board have got a very good gassification technology development and this might well be to the advantage of the conservation of energy? But are the Government satisfied that the direct coal to oil route is the proper one at the present time, as against the possibility of using coal to fire refineries, thereby saving the heavy fuel oil for distillation to a higher grade fuel?

My Lords, I think my noble friend has a point. What the Government have to weigh, obviously, are various plural systems of energy generation, and what may be inconceivable or expensive at this moment might rapidly become conceivable and cheap in the future.

My Lords, is the noble Earl aware that the accountancy that we apply to a company we cannot apply to a nation? Secondly, is he aware that at the end of the war there were then nine Fischer-Trops plants working commercially, one of which was in Manchuria and the rest of which were mostly in Germany producing one-third of all the automotive and aviation spirit that Germany needed during the war? To cast aside this study by the Massachusetts Institute of Technology in an offhand manner is wrong at this moment when the world needs as much energy as it can get.

My Lords, I am most impressed, and I am sure the House is, by the noble Lord's expertise. I am not throwing it back in his face. We are not passing up any studies whatsoever.

My Lords, can my noble friend give the further information whether British Petroleum, as a Government controlled company who have important petrochemical plants in their work, have also been brought into this project, or are being considered as possible associates in it?

My Lords, my understanding is that the Government are in consultation with the National Coal Board on this issue, not with British Petroleum. If I am wrong I will let my noble friend know.

My Lords, may I ask the noble Earl the Minister when we are going to get a report on this matter?

My Lords, as I said in my previous answers, we are studying the issue very carefully and we will try to let the House know what has resulted from the study as soon as ever we can.