The final item of business today is a members’ business debate on motion S4M-12246, in the name of Alex Rowley, on United Kingdom Government carbon price support exemption for opencast coal sites. The debate will be concluded without any question being put.
Motion debated,
That the Parliament notes proposals put forward for the UK Government to introduce a carbon price support (CPS) exemption for opencast coal sites; acknowledges the recent difficulties in the coal industry in Scotland, which it considers were caused initially by the demise of Scottish Coal and ATH Resources, and the impact that this has had on subsequent opencast restoration projects; understands that, in 2013, the Scottish coal industry taskforce was set up to find solutions to these problems but has had limited success in doing so; recognises that the Cockburn CPS proposal aims to address some of these issues by suggesting an economically viable way of achieving more substantial restoration through a CPS exemption on restoration coal, and understands the substantial impact that this exemption could have on the restoration of some of Scotland’s most scarred landscapes, including in the communities of Kelty and Crossgates, which it considers have been significantly affected by the St Ninian’s and Muir Dean opencast sites respectively.
17:09
I am grateful to those who supported my motion and enabled the debate tonight to take place. It is on an issue that, I believe, is of the utmost importance for my constituents and for communities across many of the former coalfield areas of Scotland.
I have opencast sites in my constituency. The Muir Dean site is in Crossgates, the St Ninian’s site is in Kelty and the Blair house site is to the west, near Oakley. Thankfully, for the first two sites, a bond was in place when ATH Resources and Scottish Coal went into administration, which meant that at least a level of restoration would be carried out. However, there is scope for that level to be better, even where some restoration has taken place.
In Blair house’s case, the drawing down of the existing bond is critical to funding a viable restoration. The council is advancing the matter. Initial claims for repayment have been rejected by the Royal & Sun Alliance. Further legal advice is being sought on the next steps, and actions, including possible court action, are being considered.
Fife Council, like many local authorities, supports the proposed carbon tax.
Although my focus is to raise awareness of the massive environmental nightmare that has been left to scar many parts of Scotland’s countryside, I cannot understand why ATH Resources and Scottish Coal and their directors have not been under investigation and are not being brought to task for their role in this environmental disaster.
The point of the debate is to support the proposal for a carbon price support exemption. I am pleased that the chancellor has signalled his intention to work with the Scottish coal task force to deliver a solution for the restoration work.
The Scottish coal task force, under Fergus Ewing’s leadership, has confirmed its backing for the CPS exemption and its willingness to work with the United Kingdom Government to design and deliver such a scheme. Although work is still to be done—many sites have either absolutely no solution or a very poor solution—that is a step in the right direction.
Blair house is the clearest Fife example of a situation where, unless the bond funding position is resolved, there is no solution without the CPS exemption. There are a lot of sites like it across Scotland. Indeed, the problem’s extent and seriousness cannot be overstated. The scale is unprecedented, with some 3,500 hectares of despoiled land and a backlog that represents years of neglect that will take years to sort out. There are multiple dangerous, unprofiled and uncontrolled water bodies, with the sites being too vast to fence, let alone secure. Beyond general flooding and site degradation issues, essential pumping, monitoring and basic security represent on-going costs that will most likely have to be met by local authorities.
There is an absolute need to look for a solution. The problem has been around since the ATH Resources and Scottish Coal failed two years ago, but communities have put up with the blight for even longer. The problem is worsening as sites flood and degrade. The dangers and risks are there for all to see, and they are becoming harder and harder to ignore.
The task force has met and has been supported by all the key departments and stakeholders. However, no potential solution has been found until now. We should be clear that the CPS exemption is the only solution on the table. The only way to fix a problem of this size is to take a large portion of the capacity that caused the problem and, using different operators, direct that capacity to solving it.
A problem of such a scale needs a game-changing solution. Whatever solution is found, it must result in a large part of industry capacity being applied to the problem. There is no shortcut or quick solution. The CPS exemption will be the catalyst that focuses effort and attention away from greenfield sites and towards brownfield projects that deliver restoration.
There are two main benefits in finding a quick solution. First, industry capacity is ready to deal with the solution. Oil and gas price collapses have pulled down weak coal prices. Greenfield projects are reducing in number and operators will focus only on the small number that are profitable.
This is therefore the ideal time to focus effort on brownfield sites—not only is capacity available, but the brownfield sites offer the industry a lifeboat and give it the chance to see whether coal prices recover. Unless that lifeboat can be found, capacity will decline and disappear fast. Jobs and skills will disappear. More important, mining equipment will be sold abroad and the capability to restore the sites will decline. A huge amount of mining capacity will be required to deal with the problem, and that will take years, even if the capacity is made available.
Timing-wise, we have a perfect convergence of a need for restoration and jobs and the availability of huge capacity to deal with the problem. Therefore, current market conditions mean that the CPS exemption offers a rate and level of restoration that no one previously thought possible. Hargreaves Services has tackled some of the sites but, by its own admission, because of a shortage of funds it has only scratched the surface. The CPS exemption proposal has the backing of the industry and all the affected local authorities. We need to take action, and I hope that the Parliament will unite to push the UK Government to agree to sign up to the scheme.
17:16
I am grateful for the opportunity to contribute, and I congratulate Alex Rowley on bringing the motion to the chamber. I do not for a moment doubt his commitment to the interests of his current constituents and the people he represented in his previous role in Fife Council, who are living with the environmental wreckage of a destructive and deeply irresponsible industry that has been allowed to thrive in this country for too long. However, I am bound to say that I do not agree with his conclusion about the carbon price support exemption. I will explain why.
We are talking about an industry that, like many others that are involved in the extraction of mineral resources, has behaved with breathtaking irresponsibility over many years. It has been happy to walk away with the proceeds of that economic activity while abandoning the environmental and social liabilities that have been built up. Sadly, all too often such assets come back into active use to enrich some other company that comes along, but the liabilities fall on the public, who live with the results of the destructive activity and with the failure to carry out restoration, and on the public purse, from which the funding comes for the restoration that takes place.
Here we are again. Sadly, the Scottish and UK Governments both seem to want to continue this destructive activity. That is evident not just in the Scottish Government’s decisions, but in areas in which functions are reserved, such as the approach to rail track access. If rail track access charges were priced fairly, the industry would pay a great deal more for coal to be taken by rail, which would bring an end to opencast extraction.
It is clear that some people would not welcome that. Some people look at any kind of economic activity that we are overreliant and overdependent on and say, “Jobs are involved, so we must sustain it.” It is tiresome how often those who point out the fundamental unsustainability of certain industries, including fossil fuel extraction, are blamed for pointing out that unsustainability and arguing that a change is necessary. I am referring not only to the state of the opencast coal industry, but to the likely closure—whether next year or in a few years’ time—of Longannet, which will deprive the industry of a great deal of its market.
We do not need the coal any more, because it is not economically, environmentally or socially beneficial to use it in energy generation. It fails every test of modern energy policy: the security of supply test, the low-carbon test and the affordability test.
As I live in a former coalfield area, I have been involved in a range of major land use issues in my area and I have objected to opencast coal applications several times. Does Patrick Harvie accept that there are specific occasions when it is relevant and appropriate to engage in opencast activity in order to clean up former industrial sites, because that is almost the only option?
I cannot agree that, to fund restoration, we have to carry on making the problem worse. I will wind up in just a moment, Presiding Officer, but I have to say that that is what I believe would happen—
I will give you back your time for the intervention, Mr Harvie.
That is what I believe would happen if we pursued the policy that has been suggested and which, it should not surprise us to hear, has come from an industry proposition and from the people who want the business to continue. It is Hargreaves Services that has suggested the CPS tax exemption. If we pursue that policy, we will create even more incentives for otherwise marginal projects to be developed and for opencast extraction to be continued when we need it to end.
I know that saying this will not be popular in all parts of the country—particularly those that have been left dependent on a dying industry—but we need to recognise that the industry is dying if we are to begin to have the frame of mind that allows us to develop alternatives. We should be looking at alternative economic uses for the sites and alternative sustainable economic activities in the areas that have become overdependent on this unsustainable activity.
Simply digging ourselves ever deeper into our current hole will make the problem worse, not better. Like the RSPB, which has sent round a briefing on its concerns about the CPS exemption, I argue that there are alternative approaches that look towards the decline of the industry but which seek to use public funds for restoration instead of consent for additional opencast extraction. I welcome the opportunity to debate the issues, but I must part company on the conclusions that have been reached.
17:21
I congratulate Alex Rowley on securing this evening’s debate, and I very much support the general thrust of his argument and observations. That said, I take some issue with his motion—particularly the reference to the “limited success” of the Scottish coal industry task force. The phrase “damning with faint praise” comes to mind.
From my perspective, the task force has been a great success. It has brought together all the relevant stakeholders to ensure, first, that the employment crisis that was created after 700 people were thrown out of work was effectively tackled; secondly, that the failures in planning and regulatory regimes were addressed to prevent the mistakes of the past from being repeated; and finally, that solutions to restore abandoned opencast sites were found. The latter is still a work in progress but, without the task force, I doubt whether anything of substance would have emerged at all.
Given the scale of opencast coal operations in the Ayrshire coalfield, the subject of the debate is a vital constituency interest of mine. Because the coalfield has historically produced over 50 per cent of all opencast coal in Scotland, the adverse environmental impact of the collapse of the two coal companies, ATH Resources and the Scottish Resources Group, is of a similar scale. In financial terms, East Ayrshire Council has been left with a notional bill of £161 million to restore former opencast sites to a state agreed with planning consent, but total restoration bond coverage amounts to only £29 million, and some of the bond providers are making life difficult for the council to call down the bonds’ full value.
In physical terms, we have been left with 20km2 of abandoned and derelict land pitted with huge sheer-sided voids, many of which have filled with water. As a result, public safety and on-going pollution threats are of real and immediate concern. In that context, Hargreaves’s CPS exemption proposal provides the only financially viable plan that can deal with the problem comprehensively and in a manner that is acceptable to local communities. lain Cockburn of Hargreaves, who has done an exceptional job in working up the details of that proposal, has made it clear that local communities as well as planning authorities must have a significant say in the approval of any scheme that emerges from the tendering process that is associated with delivering restoration projects.
Finally, I welcome the declaration in the United Kingdom budget documentation that was issued today that the UK Government will work closely with the Scottish coal industry task force to deliver a restoration solution. I hope and trust that the CPS exemption route in whatever form—Patrick Harvie should be aware that the RSPB favours a different CPS exemption scheme from the one that Hargreaves proposes—will be taken sooner rather than later. I do not know whether the minister has any more information that he will be able to share with us, but I would certainly welcome his response to that development.
17:25
I did not particularly intend to speak in this debate, but I want to reflect on some of the local experience that I had in my area when I was a councillor.
The former Polkemmet colliery in my area is currently undergoing huge redevelopment with the heartlands project. That project is bringing hundreds—probably thousands—of homes, a school, retail and industrial units, and a major motorway junction on to the M8. It is beginning to make progress after a period of real difficulty during the recession.
In the middle of the opencast extraction process on the site, the contractor at the time, J Fenton and Sons, went bust. However, we did not suffer the catastrophic impact that we see in Fife, in Midlothian and elsewhere, because a new contractor came in immediately, and there was continuity in the excavation of the high-quality coal that was there.
Work went on largely without a blip. Had that not happened, we might have had the same problems that other areas have had. That was largely avoided by the skill, diligence and abilities of the local chief planning officer, Chris Norman, who is, I believe, advising the task force. He negotiated a very significant and tight bond that meant that, when the hole that was being excavated for coal was at its deepest, the bond was at its largest. Therefore, had no new contractor come in, the bond would have covered and fully restored the site.
The contractor squealed at that point. It squealed that it wanted to draw down cash from the bond in order to keep the company going, but that was refused. We were under a lot of pressure on the council at that time to give in, but we refused because we knew that, if the contractor went bust after taking down the bond, the consequence would have been exactly the scenario that we see in Ayrshire, Fife and Midlothian. There was a significant negotiation in order to ensure that the bond was very tight, and there are lessons to be learned from that.
I think that Mr Harvie may have misunderstood the point that I made to him. In order to remove a burning bing that had been on the site for decades and which was causing the silver in people’s houses to tarnish—God knows what was happening to their lungs and their breathing—and to get rid of the contaminated land, the water, the flooding and all sorts of other problems, opencast was the only option. It was almost the only game in town. Mr Harvie can shake his head all he likes, but that was the reality of the situation.
How on earth can the only solution to environmental destruction be more environmental destruction?
The method that was used to deal with the burning bing was to extract and fold the bing into the hole that was there to extinguish it—to put it out—and then restore the site. The process was very technical, but that was one of the few options that were available on the site. Had we not gone down that route, I think that we would have had a huge environmental disaster on our doorstep.
All I say in this debate is that we should learn from what has happened in West Lothian and the excellent practice of the local authority that avoided the disasters that have happened elsewhere.
I do not particularly want to comment on the issues in relation to the CPS exemption; I do not know enough about it. All I am saying is that, although we have had disasters in some areas of Scotland, we have also had very good experience of local authorities acting responsibly.
17:30
All those who represent areas in which mining has taken place are fully aware of the issues facing the opencast mining industry. Falling world prices for coal have put huge pressure on domestic providers. Moreover, as we move towards a low-carbon energy system, domestic demand for coal is going to reduce.
Just last week, the Economy, Energy and Tourism Committee took evidence about the future of Longannet power station in Fife. It may close as early as March next year, but in any event it is clear that the plant has no future beyond 2020, primarily as a result of European Union emissions directives and carbon pricing.
Longannet is still a major buyer of coal from Scottish producers. That creates a headache for our remaining coal producers, among them Hargreaves, which announced last week that 85 jobs are at risk at sites across Scotland. Hargreaves, which is based in Durham, has been operating at sites in Fife and Ayrshire, having taken them over following the collapse of mining companies Scottish Resources Group and ATH Aardvark in 2013.
Alex Rowley’s motion highlights a related issue: the restoration of existing opencast mines. We are all familiar with the legacy of previous mining operations at sites in Fife and Ayrshire. Companies have gone into liquidation, having put aside insufficient sums to allow the sites to be properly restored, and leaving local communities with the dismal prospect of ugly unrestored sites on their doorstep, potentially for many years to come.
Hargreaves has estimated that the remediation of 35km2 of land could take five years to complete. The work would involve the creation and safeguarding of 1,000 direct mining jobs and 1,500 indirect jobs. However, it can be done only if we continue to extract coal from the sites to pay the cost of restoration.
The problem is that the sums simply do not add up. That is why Hargreaves has submitted a proposal to the Department of Energy and Climate Change and the Treasury for a carbon price support exemption to free up the necessary resources. If successful, the CPS exemption would allow full restoration of the existing sites and an extra 1 million tonnes of coal to be extracted per annum. That could be done at no net cost to the taxpayer by generating additional fuel duty and protecting existing jobs.
The Hargreaves proposals have been submitted to the Scottish Government’s coal industry task force, of which I am pleased to be a member. Last year, I wrote to DECC with my support for the proposals that are currently under consideration by the United Kingdom Treasury. Hargreaves has worked hard to gain cross-party support for what it proposes.
Of course it is easy for us in Parliament to call on the UK Government to forgo tax revenue, but I hope that the Treasury and DECC look upon the proposals favourably. Today’s announcement from the Chancellor of the Exchequer provides some encouragement.
I am aware that Hargreaves’s proposals do not command unanimous support. There have been competing proposals, and there is some scepticism in some quarters as to whether the CPS exemption will deliver the benefits that Hargreaves sets out. Nevertheless, action needs to be taken. The danger is that, without some intervention, there will be no restoration of the sites, there will be a loss of jobs, we will lose the skills involved in the industry for good, and future generations will have to live with a legacy of inaction.
I hope that we will see progress on the issue, either along the lines of the Hargreaves proposal or in some other manner. I hope that the debate is helpful in advancing that agenda, and I close by commending Alex Rowley for bringing it to the chamber.
17:34
I also congratulate Alex Rowley on bringing the matter to debate. I recognise his strong constituency interest. In the same way as Mr Ingram, I find myself in agreement with most of what he said this evening.
As Alex Rowley set out, the coal industry task force was set up in the aftermath of the insolvency and administration of the Scottish Resources Group—Scottish Coal, as it was—and ATH. The purposes of the task force were twofold. The first purpose was to seek the re-engagement of as many as possible of the several hundred employees who lost their jobs, many of them in parts of Scotland where there are very few alternatives, if any, and none at the level of remuneration that the employees enjoyed. The second purpose was to find an approach to tackle the considerable problem of restoration of the coaled-out sites. Those were the two objectives.
Mr Ingram mentioned the work that the group has done. I have been pleased to be the co-chair, along with Russel Griggs, of the group. It has been the largest task force that I have ever chaired, and I have chaired quite a few. I have been grateful for the contributions of Mr Rowley; Mr Ingram; Sandra Osborne; Aileen Campbell, who is here this evening; Murdo Fraser; Willie Rennie, who is not here this evening; Willie Coffey; and Cathy Jamieson. I hope that I have not inadvertently omitted anybody.
I mention those names because it has been a cross-party effort. We have largely put politics aside. I cannot think of any of the eight meetings of the task force where party politics has interposed or been relevant, and that has helped to drive forward some of the solutions and achievements that the task force has reached. One of them was to see the re-engagement of 500 people from Hargreaves in just under a year. That was a terrific achievement given the difficulties.
I also pay tribute to the other players. Companies such as Kier, Banks and others have played a part, as have service companies such as Caterpillar and Terex, which are to some extent dependent on the continuation of this work. Up to several thousand jobs are indirectly dependent on the sector, as Mr Findlay said, in coaling communities. There is a whole network of subcontractors and jobs that are dependent on the work continuing.
We had a heavy onus of responsibility, but we managed to play a part in seeing that progress happen, and £200,000 being devoted to ticketing issues. We persuaded the Office of Rail Regulation to cut its increase in freight charges from £4 to £1 a tonne—a great achievement—after we gave it a significant cross-examination at the task force.
Local authorities have made progress with calling up bonds. It is difficult work, but they have achieved successes by working together and leaving the politics aside.
Rather than fold, the task force continued because of the new, emerging series of problems that is caused by the low world coal price, which Murdo Fraser rightly referred to. It places considerable further economic pressure on the operators, and in my opinion, unless it is addressed by a solution such as is now on the table, it may lead to the termination of the opencast sector in perhaps two or three years’ time.
The proposal that was put by the industry and adopted unanimously by the task force is that there should be an extension to the existing exemptions from the carbon price support mechanism—the carbon tax—and it should be very narrowly defined. Restoration projects would be subject to competitive tender and an open process. The proposal uses coal that remains on or adjacent to the sites to subsidise the costs of the restoration scheme. Extraction of coal would be considered where the extraction creates value and a net cost reduction for a restoration scheme.
The Coal Authority would have oversight and would provide ballast and an element of control mechanism, which is necessary for such a scheme. The proposal would cover all sites that were left with unfunded restoration liabilities. The definition of orphan sites needs to be carefully considered, but no sites that should not attract exemption support would be inadvertently supported. The starting premise for the objective of the scheme would be to deliver restoration to the level that was consented at the time of the failure of ATH and SRG.
I am pleased that, on page 97 of the red book associated with the budget announcement today by the Chancellor of the Exchequer, the UK Government makes the following statement:
“The government will work closely with the Scottish Coal Task Force and industry stakeholders to explore alternative options for addressing the environmental liabilities associated with unrestored opencast mines in Scotland.”
That is a possible step forward and one that I welcome in the spirit in which it is offered and in the spirit that, as I said, has been followed in the opencast task force. The statement does not refer to the UK Government agreeing in principle that there should be the exemption that is sought but, be that as it may, let us hope that that is what is in the UK Government’s mind.
Having become aware of that today, as the minister with responsibility for energy in the Scottish Government, I will therefore make immediate contact with the UK Government to seek a meeting with the Exchequer Secretary to the Treasury, Priti Patel, to press for adoption of the solution that has such cross-party support here in Scotland. When I do so, I will relay to her the broad-based support of all the main parties in Scotland, and I am pleased to be able to do so.
If the proposal, or some version of it, is not adopted, I will be very concerned for the future of all the people who are working in the coaling communities. I have met many of them. I have met their representatives and discussed the issue with their union representatives, for whom I have the greatest respect. They are terrific people and it has been an honour to meet them. I want to do right by them. I, with the support of colleagues in the main parties in Scotland and working with party spokespeople, will do everything that I possibly can to see the exemption granted.
Coaling and restoring go together. Those voices on the fringes that say that we can have restoring without coaling do not, I am afraid to say, understand the reality of the situation, as has been set out by both Mr Rowley and Mr Fraser. Fortunately, that is a minority view. I am delighted that, in this debate, we have heard a clear and virtually unanimous view that we have managed—those of us who display some vestiges of common sense and rationality—to work together to help those who deserve our help and who elect us here to help them, to stand up for their interests and not to regard their work as dispensable on the altar of some ideological view.
I will do everything in my power to further the very good work that those of us who have taken part positively in the debate have displayed this evening. I will put every possible effort into it, and I guarantee to every member in this chamber that that is what I will do.
Meeting closed at 17:43.Previous
Decision Time