Coal Industry
The final item of business today is a members’ business debate on motion S4M-04875, in the name of Adam Ingram, on the Scottish coal industry. The debate will be concluded without any question being put.
Motion debated,
That the Parliament recognises the importance of the coal industry, which it considers has been and remains a significant contributor to local and rural economies in East Ayrshire, Fife, South Lanarkshire, Dumfries and Galloway, North Lanarkshire, Midlothian and West Lothian; considers the industry a mainstay occupation in the Scottish economy, generating £450 million of economic value to Scotland every year and, with its wider supply chain, employing on average 4,000 people; welcomes the fact that two Scottish projects are being considered to take forward the next phase of the UK Government’s £1 billion carbon capture and storage programme to demonstrate the potential to greatly reduce the carbon impact of fossil fuel power generation as Scotland moves to a low-carbon future, but is concerned that future investment in the industry is being threatened by an adverse and unintended effect of the carbon reduction commitment and proposals by the Office of Rail Regulation to hike freight access charges for Scottish coal producers.
17:05
I thank the members whose support has allowed the debate to be brought to the chamber this evening.
Although the Scottish coal industry is no longer the industrial behemoth of the past, it remains a significant contributor to the Scottish economy through surface mining activities. It supports around 1,500 direct, full-time jobs and 3,000 indirect jobs in the Scottish supply chain, and generates approximately £450 million per annum in economic value for Scotland.
The communities that I represent in the Ayrshire coalfield remain reliant on the good health of the coal companies and their production activities. More than half the Scottish industry’s employment and output is generated within the Cumnock and Doon valley area of East Ayrshire. The jobs that are provided are well paid. The average salary is more than £42,000, which is approximately 66 per cent above the overall Scottish average of £25,000 or so. That said, there is a dearth of alternative employment in the coalfield area. Scotland’s index of multiple deprivation shows that more than 30 per cent of the Ayrshire coalfield’s data zones are in the most deprived bracket. From those statistics, it should be evident that continuation of coal production in the face of current challenges is of vital importance to those communities.
Members will be aware that two of the four coal companies that operate in Scotland—ATH Resources plc and the Scottish Resources Group, which is also known as Scottish Coal—have reported significant financial difficulties related to the low selling price of coal and rising costs. I know that the minister has been heavily engaged in supporting those companies’ attempts to secure current and future operations. I am sure that Parliament would be grateful for any feedback and reassurance that the minister can provide at this time.
I am also aware that Scottish ministers and Scottish Government officials have been working hard to relieve some of the adverse pressures on the industry. For example, Scottish ministers were instrumental in relieving the extra burden that was placed on coal companies that had switched from transporting coal from extraction sites to railheads by road to using long cross-country conveyer belts. One might have thought that that was an enlightened investment, but the increased electricity consumption that is needed to power the conveyer belt networks breached the threshold set by the United Kingdom Government’s carbon reduction commitment energy efficiency scheme and incurred massive penalties and future liabilities running into millions of pounds. No allowance was made for the significant reduction in CO2 emissions that was achieved by switching from road transport to conveyer belt. Thankfully, and due in no small part to pressure from the Scottish Government, in his autumn statement the chancellor exempted long conveyer belts from the scheme from July 2013, which will relieve future burdens. However, I understand that Scottish ministers are still pressing UK ministers to relieve the liabilities that were incurred during the scheme’s first year of operation.
The Office of Rail Regulation’s introduction of increased track access charges on a distance basis for coal freight that is to be phased in from 2016-17 is another contrary proposal with potentially disastrous consequences for the viability of the Scottish coal industry and, indeed, the prospects for the future development of clean coal electricity generation in Scotland. It appears that little consideration has been given to Scottish circumstances. For example, the price of coal from English ports and mines to power stations in England might rise by £1 per tonne, but the equivalent rise from Scottish sources could be £4 per tonne. Clearly, the threat extends beyond the mining companies to Hunterston port and Longannet power station. The proposal makes even less environmental sense as it will encourage the modal shift of coal traffic from rail to road. All the evidence that we have suggests that imported coal flows from Hunterston to Longannet will be affected.
Another pressure on surface coal-mining operations in Scotland relates to restoration bonds. Since the financial crash of 2008, the coal companies have been struggling to secure the bond-type guarantees that local authorities require under section 75 agreements for restoration and aftercare of sites. There are now very few bond providers in the marketplace and their costs have consequently escalated. Again, the Scottish Government is actively trying to find an acceptable alternative model of assurance for planning authorities and coal operators.
Taken together, that combination of pressures is a severe threat to investment in an industry that is currently producing around 5 million tonnes of coal per annum but has permitted reserves of 39 million tonnes in operational sites across Scotland. Significant though that output might be, the coal resource and the industry have much greater potential. As Scotland still has several centuries’ worth of mineable coal reserves, security of supply is clearly not an issue. It remains an ideal fuel for baseload and for responding to electricity demand peaks on cold winter nights. That potential will be unlocked with the successful full-scale demonstration of clean coal technologies such as carbon capture and storage, which will greatly reduce the carbon impact of fossil fuel power generation.
Together with our investment in renewables, Scotland could be a world leader in creating a low-carbon future. We have the knowledge and expertise in our universities and industry and the infrastructure in the North Sea. The Summit Power bid to the UK’s CCS commercialisation programme for a coal gasification plant fitted with a fully integrated CCS system at Grangemouth could be a trailblazer.
I am absolutely convinced that the Scottish Government has the vision and drive to achieve that ambition. As ever, though, we are constrained by the UK straitjacket.
17:12
I am delighted to contribute to this debate on the Scottish coal industry’s importance to the wider Scottish economy, and I thank Adam Ingram for securing it.
In the face of new and emerging technologies, coal’s importance as an energy source can often be forgotten or marginalised. However, as the motion states, more than 4,000 people are directly or indirectly employed in an industry that contributes an annual £450 million to the Scottish economy.
Many areas of Scotland have a strong mining legacy, if not an active workforce who remain employed in an industry that has existed here since the 12th century. Many of us in the chamber will have family members in the industry, or will have been born or brought up in mining villages; indeed, I come all the way from Moodiesburn in the North Lanarkshire Council area. When I was speaking to colleagues yesterday, I mentioned the Auchengeich mine—I am sure they thought I was swearing at them. I am sad to say that I am not a coal miner’s daughter, but I nearly am and I certainly understand the sense of community that comes from being part of a Scottish mining family.
Alongside the value of the industry to Scotland, the culture of mining families and communities has greatly benefited towns and villages across the country and has encouraged generations to work together for the wider community’s benefit. For example, the Scottish Coal Industry Special Welfare Fund is an independent charity that provides financial assistance to vulnerable people who have connections to the mining industry. The scheme awards grants to former miners or their family members in times of hardship, and it dispenses funds that are reserved for community groups that provide services to those who have mining connections or associations with the coal industry. That is just one example of the many schemes that were established to support Scotland’s coal industry, and it serves to illustrate the importance that the mining industry continues to command within villages, towns and cities across Scotland.
It is clear that Scotland’s coal industry deserves continued support and recognition from the Scottish Government, given its relevance and value to our nation in a number of different ways. Although it is important that we deliver cleaner and more sustainable ways of producing energy in the future, we know that coal will continue to play a significant role in producing energy for decades to come, and that Scotland will be able to rely on the substantial benefit that it brings to our economy through these challenging times.
I hope that the Scottish Government will fully recognise the value that the sector has not just for those who are employed in the industry, but for those who benefit from the charitable values and community spirit that are characteristic of our mining communities.
17:16
I congratulate my colleague Adam Ingram on bringing the matter to the attention of Parliament by securing this evening’s members’ business debate.
In a country that is as resource-rich as ours, with booming industries in oil and gas alongside the exciting new developments in renewable energy, it can be all too easy to dismiss the coal industry’s relevance to modern-day Scotland. Once the powerhouse of Scotland’s economy, with 150,000 workers producing 40 million tonnes of coal every year by the 1900s, the coal industry may no longer exist on the scale that it once did, but its contribution to local and national economies remains as important as ever.
Nowhere is that more evident than in East Ayrshire. Like Scotland as a whole, East Ayrshire has a long history of coal mining and production. That history has had its fair share of highlights and tragedies, but it has shaped the community for hundreds of years and continues to do so. I am indebted, for obvious reasons, to my granddad Daniel Coffey for surviving a mining accident in 1927 at the Windyedge pit, near Gatehead in my constituency, which killed two of his companions. The mining industry still touches many families in Ayrshire today.
The coal industry’s decline in recent years has been reflected in parts of the community, but that is exactly why what remains of the industry is so important to East Ayrshire. Some 704 people are directly involved in coal-work operations in the area. That represents 58 per cent of the total for Scotland and an increase of 11.8 per cent since 2008. Those workers ensure that East Ayrshire produces more than half of Scotland’s entire coal output, with a little under 3 million tonnes being produced in the area each year. Indeed, the coal industry provides 5.6 per cent of the area’s gross value added output, which is far more than for any other local authority area in Scotland. It could be convincingly argued, therefore, that East Ayrshire represents the heart of Scotland’s coal industry, and that that heart is still beating strongly. In cash terms, those 3 million tonnes of coal account for £46 million gross valued added output, which means that East Ayrshire again leads the way by contributing more than half of Scotland’s entire coal industry GVA.
For that reason, I must join my colleague Adam Ingram in welcoming the consideration of two Scottish projects to take forward the next phase of the UK Government’s carbon capture and storage programme. As producers and beneficiaries of fossil fuels, we hold a responsibility to contribute to limiting the negative effects that their use may have on our environment and the environments of others. We are already making a great contribution to helping the victims of climate change in other parts of the world through our climate justice fund, but it remains as important as ever that we seek ways to prevent such damage in the first place rather than to cure it afterwards. Carbon-capture technology will undoubtedly help us to achieve that.
However, I share my colleague’s concern at the proposals substantially to increase from 2016 the cost of transporting coal by rail. The Office of Rail Regulation, which plans to introduce the charges, anticipates an increase in cost to freight operators of between 3 and 5 per cent. Although we must recognise the good intention behind the increase—namely, to ease the burden on the taxpayer—we must nonetheless consider the long-term impact that the plans might have on the coal industry as a whole. Rail freight should not become a cash cow, because freight hauliers could move much of it back on to the road network, which I am sure we would not wish for.
17:20
I, too, congratulate Adam Ingram on securing the debate and thank him for giving us the opportunity to debate the coal industry which, as the motion states, is important in my constituency.
I must admit that I was uncertain about the motion’s reference to an
“adverse and unintended effect of the carbon reduction commitment”,
so I thank Mr Ingram for his explanation of that; the reference is to long conveyor belts, one of which operates on the Glenmuckloch site in my constituency. However, I know that on 24 October last year my colleague Sandra Osborne led a debate at Westminster on the effect of the proposed increase in freight track charges on the industry in Scotland. She believes that the proposal could result in a reduction in mining effort and freight transport in Scotland, and could even threaten the future of carbon capture and storage projects.
Part of Upper Nithsdale is in Mr Ingram’s constituency and part of it is in my constituency. The communities of Sanquhar and Kirkconnel were in the past sustained by the mining industry. In fact, the village of Kelloholm, which is adjacent to Kirkconnel, was constructed to serve the many coal mines in the area. However, unfortunately, much of that village subsequently had to be destroyed. The destruction of the UK coal mining industry by Margaret Thatcher’s Government in the 1980s also destroyed most of the jobs in the area and left an enduring legacy of unemployment and deprivation, for which that Government has to this day not been forgiven by local people.
Some surface mining continues, although unfortunately it is under a cloud of uncertainty. Mr Ingram referred to ATH Resources, which is one of the largest opencast coal mining companies in Scotland and which employs about 300 people, more than 200 of whom live in Dumfries and Galloway and East Ayrshire. Unfortunately, the company went into administration on 5 December last year. That was the latest in a number of worrying developments, which include the decision to put on hold plans to extend the Glenmuckloch site near Kirkconnel only 10 months after the extension was announced, and the announcement in May last year that 60 jobs were in jeopardy, which came hot on the heels of the loss of 11 jobs just a month earlier. Buccleuch Estates, which owns the Glenmuckloch site, was concerned that remedial work to restore former opencast areas on site might also be threatened as a result of the restoration bond issue that Mr Ingram described.
I am not always nice to Scottish Government ministers, but in this instance I record my gratitude to the Minister for Energy, Enterprise and Tourism for his interest in that difficult situation and for his request to Professor Russel Griggs, who has been working closely with partners to attempt to find a solution that will preserve as many of the jobs as possible, if not all of them. Fortunately, Aardvark TMC Ltd, which is the parent company, is continuing to trade, which means that employee, supplier and customer contracts continue to be honoured. It is to be hoped that the financial restructuring of the group and the purchase of its debt by Better Capital LLP will allow new investment to be secured. In an area of high unemployment and limited alternative opportunities, the jobs are extremely valuable. One of the main factors that has brought ATH to its current position is the fall in the global price of coal. Ironically, one factor in that is the development of shale oil and gas technology in the United States.
Given that story, it is perhaps surprising that there is now considerable interest in the coal reserves in another part of my constituency: Canonbie, where the mines closed about 70 years ago, although seams of high-quality coal that stretch out under the Solway remain. Recently, two companies have expressed an interest in opencast and drift mining, although I am not sure that their enthusiasm is shared by everyone who lives in the area. However, I hope that that interest indicates a positive future for the coal industry in Scotland, and that it will continue to be an important part of our energy supply in the coming years.
17:24
I thank Adam Ingram for securing the debate. I enjoyed listening to his opening speech and found myself agreeing with most of it, although he rather lost me with his final line.
There is something of a misunderstanding about the coal industry in Scotland. Many people assume that, with the closure of the deep pits, the industry no longer exists. I do not want to get involved in a historical dispute, but I say gently to Dr Elaine Murray that the person who did most to close the deep mining industry in Scotland was not Margaret Thatcher but Arthur Scargill.
There are still huge reserves of coal in Scotland. It is a valuable source of energy that we should use. In recent years, it has become rather the ugly duckling of energy generation, but despite that, the industry is still key to our energy future. As in life, when it comes to energy, balance is crucial. An overreliance on gas—or, indeed, renewables—could handicap the future profitability of businesses and threaten us with spreading fuel poverty.
As Adam Ingram set out, in Scotland, the coal industry contributes more than 4,000 jobs and generates more than £450 million for the economy. In the main, those jobs are permanent and stable and the wages can be higher than average. In some cases, they can be up to three times the wages of people who work in supermarkets. In my region—in Fife and Stirling—the coal industry supports hundreds of jobs. Scotland’s largest supplier of solid fuel, Fergusson Coal, operates from Stirling and alone sustains 200 jobs.
Despite coal currently being responsible for 54 per cent of the UK’s energy mix, its future is uncertain. Adam Ingram and Elaine Murray referred to the opencast mining company ATH, which announced just before Christmas that it was falling into administration, which has placed question marks over the 300 jobs that it supports—some of them in my constituency.
Cheaper foreign coal is also threatening the industry’s survival in Scotland and industry leaders tell me that the burden of regulation is also hindering its competitiveness. The industry needs assurances on its future from the UK Government and the Scottish Government. There needs to be a strategy for coal just as there is a strategy for gas. It would be good to hear the minister publicly commit to the future of coal within Scotland’s energy mix.
I agree with much of what Murdo Fraser has said, but does he agree that, as has been said already, the ORR’s proposed track access charges represent a pretty serious additional threat to the coal industry?
Yes. I will address that point if time allows, but the point that I want to make to the minister is that prospective investors need assurances about the future of coal and will invest only if they believe that its future is secure.
I will address the point that the minister made. There was some good news for the industry last week, because the Office of Rail Regulation postponed the introduction of new freight charges. It chose the lowest increase and to phase the full cost over three years, which means that the industry has more time to adapt.
However, I recognise that there are still concerns for Scottish coal producers, and that coal travelling long distances from Scottish mines to English power stations will face higher charges. It is a matter of balance between what the industry pays and what the taxpayer pays. We need to be aware of that.
Coal means security of supply. There are between 100 and 300 years of coal left in Scotland. It is also cheap—it is the cheapest form of energy. It costs £25 per megawatt hour compared to £140 per megawatt hour for offshore wind.
Coal has a role to play, but we cannot ignore the emissions issue. Coal is not clean, but it can be clean. Intensive scrubbing and other measures are greatly reducing pollutants, but the future must be carbon capture and storage. I join other members in the debate in hoping that the opportunities at Peterhead and Grangemouth for experimental CCS plants will get the go-ahead. With those, we could have clean coal and this vital industry and the jobs that it supports would have a bright future.
17:29
I, too, congratulate Adam Ingram on securing the debate. It is an important debate for the Scottish economy and for those of us who have had the privilege to serve constituencies in which coal mining has been at the heart of the community.
My father-in-law died last year and we have been clearing out his papers over the past months. It has been fascinating to see the extent to which much of the technology in the coal industry has changed over the years. Adam Ingram and others mentioned that. As Adam Ingram rightly states in his motion and said in his speech, there are opportunities to develop coal in Scotland provided that there is political will to secure that outcome.
As others have said, it is vital that we remember that there are still 3,000 to 4,000 jobs in the industry. Surface mining is the only source of well-paid jobs in some communities in which it is located. Coal industry wages can be three times the wages for working in a Tesco supermarket, and the working conditions are better. Also, local suppliers rely on the industry.
We heard much about carbon capture and storage this afternoon. It is vital for the future of Scottish energy, and it seems to me that the proposed major CCS project at Grangemouth would be ideal. The site is near coalfields, it is on the east coast of Scotland towards the North Sea, and there is already a local community of interest in energy. In recent weeks, the development of CCS work in north Germany has looked promising, but let us ensure that Britain is not slow to develop and sell the technology. Previously, we have missed opportunities that have been grabbed by other countries.
I am advised that the carbon reduction commitment has been a civil service bureaucratic nightmare. It was badly thought out and is impossible to operate. A ludicrous position has arisen whereby companies delivering more than a certain tonnage on conveyor belts are taxed, but they can avoid it by using diesel lorries instead. So much for carbon reduction. The UK Government is embarrassed, but it has not apologised. At least the fees will now apply only in the current fiscal year; previously, they were to be permanent.
We also discussed freight access charges this afternoon. I welcome the news that Murdo Fraser has just made me aware of, because the Office of Rail Regulation, which sets track access charges, proposed to double the cost of moving coal by rail in Scotland. That would mean a movement to more lorries on Scottish roads, and not only for coal, as the increases would apply to other rail freight movements as well. I have always believed that Governments should incentivise industry to move freight to rail. I well remember Scottish ministers in the first session of the Scottish Parliament making £600,000 available for the movement of Safeway goods from road to rail at Inverness. I thought that that was splendid. It was the first time in 18 years that there had been an announcement by any Government in the UK of such an award for the movement of goods from road to rail. It is absolutely the right way forward; if we stop to think about the damage that heavy goods vehicles do to our roads, we see that it has to be the answer.
On the sustainability of Scottish coal reserves, although coal has been mined for centuries, it is estimated that 75 per cent of all coal that was and is mineable in Scotland—I include post-industrial revolution consumption—is still in the ground waiting to be won. In other words, coal will be available for several more centuries.
On security of supply, economically, it is Scotland’s coal. It is indigenous and not imported. George Osborne’s dash for imported gas is unsustainable. Domestic gas prices for electors are already causing severe fuel poverty. What will prices be like in the future? Can we rely on Russia not to hold us to ransom on price and on Iran not to block the Strait of Hormuz? What of the Qatar-based gas price cartel? Surely it is also environmentally unfriendly to import coal from halfway around the world, given the shipping costs and fuel consumption.
I would be grateful if you could draw to a close, please.
I am grateful to have had the chance to contribute to the debate, Presiding Officer. Thank you.
17:33
I, too, congratulate Adam Ingram on securing this members’ business debate. It is important to recognise, as the motion does, the value of the coal industry in Scotland and the fact that coalfield communities are relevant to modern-day Scotland. As Adam Ingram stated, despite the decline that has been visited on the coal industry, it still contributes significantly to the Scottish economy and it has a future with the right support and encouragement.
This debate is important for some of us as, it should be remembered, next year will be the 30th anniversary of the miners’ strike and the subsequent actions by Margaret Thatcher, which some would argue led to the demise of the coal industry in Scotland and other parts of the UK.
Scotland has an industrial heritage that we should be proud of and we must realise that no community should be left behind, especially when traditional industries such as mining are looking forward to a brighter tomorrow.
It is vital that we offer traditional mining communities a sustainable future, as the preceding generations deserved nothing less. It is worth noting that the case for a growing Scottish coal industry is based on the use of the latest CCS technology. Therefore, what many people regard as a dirty industry could find itself renewed.
It is also worth observing that coal is being shipped into Scotland from overseas and transported across central Scotland from Hunterston in Ayrshire to Longannet in Fife. If the charges on the transportation of coal are imposed, I estimate that, on the 23 journeys that are made daily, six days a week, they could add £2 million to the cost of transportation. That cost will not be borne by taxpayers, as Murdo Fraser rightly said, but by the consumers who use the energy that is produced.
There is more that we can all do as individuals for the low-carbon economy and there is more that the UK Government and the Scottish Government can deliver on policy development. I am therefore encouraged that the Scottish Government has carried on the good work that it started when it published the discussion paper “Towards a Low Carbon Economy for Scotland” back in March 2010.
The advancement of a low-carbon economic strategy will also aim to make Scotland more capable of resisting the volatility that is associated with ever-increasing energy prices. The future is clearly geared towards a low-carbon economy, which is even more apparent considering the aim to almost completely decarbonise road transportation by 2050.
Many parts of Ayrshire and Lanarkshire that are highlighted in the motion suffer from deep-seated levels of poverty and, as a consequence, depopulation is also a factor. Of course, it would be remiss not to state that there is an issue of hidden unemployment. In North Lanarkshire there are more than 13,000 claimants in receipt of severe disablement allowance.
We need to embrace the fact that coal is not completely the sunset industry that people might think it is and that there is, I hope, a better future for people of all ages in mining communities that have suffered from deindustrialisation over a significant period. Scotland needs to have reindustrialisation as a vital part of our economic future. The First Minister stated in the chamber that investment is critically important in the process of renewal and regeneration and that
“investment will prepare our nation to meet the challenges of the future.”—[Official Report, 26 May 2011; c 70.]
I live in the heart of the traditional mining villages in Lanarkshire. In the village in which I live, people still remember fondly the mining industry and what it brought to those communities. I hope that we can move towards a future in which we can see revitalisation and the creation of much-valued jobs in those communities and an industry that we can be proud of.
Due to the number of members who still wish to speak in the debate, I am minded to accept a motion without notice to extend the debate by up to 30 minutes.
Motion moved,
That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Adam Ingram.]
Motion agreed to.
17:38
The coal industry has a huge historic legacy in Scotland and across the UK, as members have mentioned. It employed more than 1.4 million at its peak and 150,000 across the coalfields in Ayrshire, Lothian and Fife, as well as in many other areas in Scotland, as Elaine Murray mentioned.
That went on until the industry was butchered by the Thatcher and Major Governments. We have to nail, once and for all, the garbage that Murdo Fraser comes out with that it was Arthur Scargill who somehow closed down the industry. If we take that logic a step further, presumably Scargill closed the car industry, heavy engineering and the steel industry. Of course he did not—the ideology that Mr Fraser worships closed down those industries.
Is the member really telling us that a megalomaniac hard-left union leader exploiting ordinary coal miners to try to bring down a democratically elected Government is something to be celebrated?
Mr Fraser needs to stop taking the drugs. If he wants evidence of a megalomaniac, he need only look at his hero—or heroine, more like. However, I invite Mr Fraser to continue his thesis and debate in public. I invite him to come at any time to Addiewell, Fauldhouse or Dalkeith miners’ welfare clubs. We can get people along to listen to his views on the time in question; I think that we could sell ringside seats and sell out.
Some would say that the coal industry is a thing of the past, but I disagree. Many members—most recently Helen Eadie—have referred to the fact that 75 per cent of Scotland’s coal is still in the ground. Most of that coal is extracted through surface-extraction methods. I have had major disagreements with the industry about that over the years, particularly when the industry seeks to extract coal on the doorstep of residential properties or when the benefits of extraction do not outweigh what it is doing to the community. However, good companies operate in such a way that people hardly notice that they are there. A major example of that in my area is the redevelopment of the former Polkemmet colliery site over the past five or six years, which has not caused any major problem in the community and which has cleaned up a large brownfield site.
Coal must of course be part of a balanced energy policy, with gas and hydro. I am sceptical about nuclear, but we have it and cannot simply wish it away, so we must look at it in all our energy policy deliberations. However, I have major concerns about the potential impact of fracking on the environment. Members have referred to the UK Government’s carbon capture policy, which has been a massive shambles. We need to get the policy back on track. My friends at the National Union of Mineworkers tell me that the price of coal has dropped by 30 per cent because of gas from the US, which is now going down the fracking route, coming on to the market. Members have referred to ATH, so I will not go over that again.
I have two further, related issues to raise. The Scottish Government is cutting the budget of the Coalfields Regeneration Trust by 67 per cent. The Tory Government in England is cutting its budget in that regard, too, but by only 12.5 per cent. However, £1 million is being taken out of the trust’s budget in Scotland by the Scottish Government, which must address that issue. I hope that Mr Ingram and his colleagues will address that.
Finally, my colleague David Hamilton and I have been running a campaign to seek a review of the cases of those who were convicted during the 1984-85 miners’ strike. More than 650 people have contacted me about that and have emailed the Cabinet Secretary for Justice over the past few weeks. There is a real sense of injustice over the issue. I hope that I will be able to come back to it over the next few weeks and months until we get a result.
17:43
I thank Adam Ingram for the opportunity to debate this important subject. Anne McTaggart said that many of us have family members with connections to the industry. The 1841 census for Muir of Bannockburn showed that 328 Stevensons lived in the area, almost all of whom were miners. One of them was James Stevenson, who was my great-great-grandfather. His father, John Stevenson, probably died in the 1830s in a mining accident. Of course, in those days they did not even bother to record deaths in the mining industry, so I shall probably never get to the reality of that. However, the mining industry touches families across Scotland, including perhaps quite unlikely families, it might be thought.
I want to touch on an experience that I had as a minister, when I visited the Nith at the request of the fishing interests there. I found a fascinating coalition of interests, with a huge environmental benefit, between the opencast mining industry and the salmon fishing industry. With the need to open up ground to get access to coal in the area, there was a need to reroute the River Nith.
The consequence of doing that and restoring the Nith has been to dramatically reduce the pollution, which has given it a much more effective environment for salmon—four times as many salmon now reach the headwaters of the Nith as was the case before the opencast coal mining industry. When we consider the coal mining and other industries that can be polluting, we need to see opportunities for those industries to work for the benefit of communities, in terms not only of the employment that they give—substantial as that unquestionably is—but of the related environmental benefits.
In capturing, via carbon capture and storage, the carbon dioxide that comes from the combustion of coal, we are playing to a secure local supply of energy. That is to be preferred to putting ourselves in the situation of importing—as the UK Government appears to want to do—wood, coal and gas from across the world. It is clear that being self-sufficient in energy is important.
Carbon capture has huge economic opportunities as a technology, not only because we can export it but because we have the depleted oil reservoirs in the North Sea into which we can pump our own and others’ CO2 . The abandoned Miller field is a particularly good example of where we can put our CO2. It was a sour oilfield—the oil that came out was acidic, so the pipes that go to the field are more resistant to acidic corrosion than other pipes to oilfields. Of course, carbonic acid is mildly acidic, so that is the perfect first field that we might contemplate using—and with a reduced cost of doing so.
I did a quick sum on rail access. If the cost increases by £4 a tonne, that is £9,200 per train, which puts that access cost into context. The rail network is a national asset that should be bound, in Scottish terms, by the public bodies’ duties in the Climate Change (Scotland) Act 2009. They should give due intent to carrying freight on the rail network. If only that was the case more generally. I hope that we see a more effective regime for carrying freight on the rail network; it has a big role to play.
17:47
I am grateful to Adam Ingram for securing this important debate and for his clear and succinct account of the industry’s importance and the challenges it faces. We are grateful to him for that; he brings a depth of knowledge of his part of Scotland to the debate. I also thank other members for their speeches.
As the Minister for Energy, Enterprise and Tourism, I am well aware of the important role that the coal industry plays in the rural and wider economy. Scottish output from surface mining—there is no underground mining in Scotland now—was around 5.5 million tonnes of coal in 2011, which represents just more than half of the UK total from surface mining. Despite the difficulties that many members have alluded to—which I will come to—Scottish output has been relatively stable over the past five years, with some marginal reductions in the 17 Scottish surface mines that were in production at the end of September 2012.
We have heard that East Ayrshire and South Lanarkshire are key areas for the coal industry, but the industry encompasses other areas, too. I had the interesting and pleasurable experience of visiting two opencast mining sites, and I was extremely impressed by the professionalism of the activity there. Although a planning application for an opencast mine can cause controversy when it is submitted, as some members have alluded to, I was also struck by the contrast between the numbers of objections that one particular company told me it had received for its last successful planning application, which I believe ran into the thousands, and the number of complaints that there have been since that opencast mine started operating a few years ago—zero. There is perhaps a lesson for us in that.
Our planning policy from 2010 seeks to minimise the negative impacts that can arise for communities, particularly those that are in close proximity to new opencast mines, but we recognise that opencast mining and coal play an important part in our energy mix. In the 24 hours to 4.30 pm today, coal generated 43.5 per cent of the UK’s electricity. Many members will be familiar with those statistics, which are available on a day-to-day basis.
Coal is still king in many respects, at many times of the year and in particular weather conditions, and it is important that the Scottish Government and all parties recognise—I think that they do—that there is a need for baseload and for thermal generation. That is very much part of our draft electricity generation policy statement. We are on a transition to a low-carbon economy, but it will be a long transition because there will be the need for baseload for many years to come, despite the fact that we will be generating and indeed exporting renewable energy most of the time.
As members said, the coal industry in Scotland supports at least 4,000 jobs, the majority of which are in rural areas. Adam Ingram set out the facts clearly, as did other members. The average salary, at around £42,000, is well above the Scottish average, so we are talking about well-paid jobs that would be difficult to replace in the locations in which they exist. From my discussions with employees, I know that people take great pride in their jobs and do them extremely well. At one of the coal companies, a consultation is going on because of the economic difficulties, and a 10 per cent reduction in wages has been proposed. The response reflects the difficulties that such companies face.
The contemplation of such a practical, responsible measure contrasts with the approach of the ORR, which Mr Ingram rightly mentioned. The increased track access charges that the ORR announced last week present a real threat to the coal industry. The ORR says that switching from road to rail reduces CO2 emissions by 70 per cent per tonne, but under its proposals a charge of £4.04 per tonne will be added to the current track access charge of £2.83 per tonne. As Dr Elaine Murray said, the unintended consequence might be that coal freight is forced on to the road network.
Worst of all, the new charge will be levied on a per-kilometre-travelled basis. Given that 50 per cent of coal produced in Scotland—around 2 million tonnes—travels to market in England by rail every year, the new arrangements will place coal operators in Scotland at a severe disadvantage compared with their competitors in England and Wales.
I am grateful for Murdo Fraser’s support in principle. He pointed out, quite reasonably, that the new charges are due to be introduced in 2016, which gives us a breathing space in which to seek to persuade the ORR that unless things change significantly the impact of the new charges will potentially be very damaging. Along with my colleague Keith Brown, who is active in making representations in that respect, I will continue to make our case heard.
Members made reference to other difficulties that the industry faces. The predominant issue is the coal price, which has fallen from £90 per tonne last March to £60 to £65 per tonne today, which is a swingeing reduction. It is not surprising that many companies in the industry face particular difficulties.
As many members know, Sir Russel Griggs, officials and I are doing everything that we can do to keep in contact with companies that are playing a leading role in Scotland. It would not be appropriate to go into detail in that regard; suffice it to say that we are doing everything that we can do and that Russel Griggs is intensively involved in that regard. I have sought to keep members who have contacted me informed on the progress of talks.
I believe that there is a bright future for the coal industry. Our strategy is correct. I and Mr Wheelhouse had a coal summit last year with a number of the main players. There have been a number of meetings and we are looking at what we can do to improve the practical difficulties that have been referred to with regard to such matters as restoration bonds—in this day and age, it is very difficult to get those bonds, if possible at all. Alternative approaches must be considered, and I am grateful that local authorities, with their detailed knowledge and understanding of the opencast industry, are involved in a positive way in the discussions. That particular challenge can be overcome.
I have been able to do justice to only a few of the issues that have been raised. The carbon reduction commitment policy was giving rise to an unintended consequence that would have severely damaged the industry. I and Mr Wheelhouse made representations to the UK Government on that, and I was pleased to have a fruitful conversation with Greg Barker on the issue. I am also pleased that a measure has been announced that will reduce part of the problem—although it will not deal with the problem as regards the money paid for the first year of the scheme. We will persist with our arguments on that in the hope that they will prevail.
I pay tribute to all who work in the industry. There is a good, strong future for the opencast mining industry in Scotland. Members have referred to carbon capture and storage and to the opportunities that exist in Scotland to take that forward—we are wholly behind that.
As many members have said, the coal industry in Scotland is part of our culture and our history. It should remain so for a long time—for many years to come—and as the energy minister I will do everything that I can, working with colleagues from all parties, to ensure that that objective is achieved.
Meeting closed at 17:57.