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Security of Supply

I am grateful to my hon. Friend for making that strong point. Both India and China are to use a mix of nuclear and coal generation. The hon. Member for Lewisham, Deptford wants to see clean coal technology; I do too, but not to the total exclusion of nuclear power. My next point is on the lack of an investment structure in this country. Several investment projects are on hold because their promoters cannot envisage proper payback for the investment needed. Building a new generating station requires a 30-year payback period. At present we have the volatility of a spot market, which we have seen fall to a very low level in the past couple of years. No senior executive will commit to a 30-year payback unless he can foresee a steady cash flow that will pay for the station. The previous Minister for Energy promised to look into encouraging long-term investment in generating capacity. I hope that the present Minister will take up the issue. The hon. Member for Barnsley, Central (Mr. Illsley) made a very good point about co-firing. Co-firing is the burning of biomass in a coal-fired power station—10 per cent. biomass to 90 per cent. coal—and the biomass qualifies for the renewables obligation. The practice has been successful, and I believe that the Department of Trade and Industry is sponsoring research into how to achieve a biomass burn of more than 10 per cent. Burning 10 per cent. biomass means 10 per cent. less CO2 emissions going up the chimney, so it is a good thing. However, in 2002 it was decided that the 25 per cent. cap on the contribution to renewables would be reduced to 10 per cent. in April this year. At the time that did not look like a stupid decision because gas and electricity prices and economics were very different, but the situation has changed. It now seems fairly bizarre to have decided to reduce the amount of biomass that can be burned in co-firing at a time when all the indicators suggest that we should be increasing the amount. I wish the Minister for Energy well in his review. I believe that the suggestions made by my hon. Friend the Member for Rutland and Melton (Mr. Duncan) have merit. The truth is that we have a risky road ahead of us. The Minister has difficult decisions to make.