Select Committee on Environmental Audit Appendices to the Minutes of Evidence


APPENDIX 2

Memorandum from the Association of Coal Mine Methane Operators (ACMMO)

COAL MINE METHANE—TACKLING GREENHOUSE GAS

1.  INTRODUCTION TO ACMMO

  The Association of Coal Mine Methane Operators (ACMMO) represents 18 companies involved with the extraction and use of methane from disused coal mines to generate electricity.

  The development of Coal Mine Methane (CMM) capture and conversion could make a significant contribution to achieving the Government's target of 10 per cent of electricity being generated from alternative sources by 2010 and for the reduction of CO2 emissions.

  This paper supplements and updates one presented to the Committee in January 2001. It will show how, through being caught between three Departments, and with a previous lack of appreciation of the size of the threat posed by coal mine methane to the environment, there is still no concrete action to tackle this problem.

2.  CONCLUSIONS AND RECOMMENDATIONS

  CMM is a potent green house gas contributing to global warming and its capture to generate electricity significantly reduces the level of these emissions in a cost-effective way.

  There is the potential of removing some 32 million tonnes of CO2e that will otherwise be emitted to atmosphere.

  The industry will develop commercially viable sites, but this will leave 75 per cent of the methane untapped unless the Government provides some incentives.

  So far CMM has been excluded from all the instruments currently available to boost alternative energy production.

  CMM is a clean source of indigenous energy which has the potential of contributing an additional 1.2 GW to the country's electricity requirements by 2010, the same amount as a nuclear power station.

  There have been many expressions of support for the contribution the industry can make to tackling the CMM problem, but so far no definite proposals have been made.

  Incentives should be supplied through the RO or an equivalent Alternative Energy Obligation which together with exemption of CMM generated power from CLL, would make it possible to tap CMM at about 365 further sites mitigating 19.5 tonnes CO2e.

  CMM development should be included in the incentives element of the ETS, from its commencement, as this will help mitigate CO2 emissions until the RO, and AEO or similar scheme can be introduced.

  CMM is a major contributor to the UK's greenhouse gas emissions and its capture to generate electricity will significantly reduce the level of these emissions in a cost-effective way within a relatively short lead time.

  Assisting the capture of CMM is a low cost method of tackling CO2 emissions and therefore should go ahead without delay.

  Given that Germany has included CMM in its renewables legislation, and the EC Directive allows each country autonomy, there is no reason why the British Government should not take action to help industry tackle the methane emissions problem.

  Coalfield community regeneration is a Government priority; CMM helps to drive this policy forward at no cost to the Exchequer.

  Time is pressing—millions of tonnes of methane continue to escape into the atmosphere as long as this debate is dragging on.

3.  COAL MINE METHANE (CMM)—REVISED FIGURES

  There are more than 1,000 closed deep coal mines in the UK from which it is estimated that a minimum of 600,000 tonnes of CMM, equivalent to 12.6 million tonnes of carbon dioxide, are seeping into the atmosphere every year.

  These reserves could continue to vent to atmosphere for over 50 years compared with an average life of 20 years for landfill methane.

  The flow rate of CMM under pumping is greater than the natural flow rate by about 150 per cent as a result of requiring a controlled gas flow at a commercially viable rate. The natural flow rate is unreliable and varies with barometric pressure such as the wind, and therefore pumps are installed to produce a controlled methane flow rate and power output. This means that a potential 32 million tonnes of CO2 can be forced out of disused mines as CMM emissions are accelerated by this process. All this gas would have come out eventually through natural venting, and ACMMO's estimates for emissions reductions given in Appendix A therefore relate to the captured gas and not to the naturally emitted gas.

  The calculation of the emission figures is supported by a methodology proposed by International Mining Consultants Ltd. This fairly precise estimate compares with DEFRA's rather more vague one given in answer to a recent PQ that: "A report produced for the Department earlier this year estimated that current UK emissions from abandoned coal mines are likely to be in the range of 20 to 300 kilo tonnes." (Hansard col 516—23 Nov 2001).

  DEFRA is to undertake a further study after April 2002 into the amount of CMM emissions. However, this will probably not report before autumn 2002 and, if no Government action is taken in the meantime, thousands of tonnes of CO2 will have been emitted unnecessarily.

  CMM is a potent greenhouse gas contributing to global warming, and its capture to generate electricity reduces the level of these emissions in a cost effective way.

  There is the potential of removing some 32 million tonnes of CO2e that will otherwise be emitted to atmosphere.

4.  CMM DEVELOPMENT

  ACMMO members have currently five sites operating and two more due to come on stream shortly. It estimates that, including these two, 45 sites are, or may be, commercially viable without any incentives and these will produce 300 MW of generating capacity saving 7.9 million tonnes of CO2e including currently operating sites.

  To develop the remaining 365 sites emitting significant quantities of CMM will require a financial incentive. Currently CMM has no incentives at all as it has been excluded from the Renewables Obligation, CCL is applied to electricity produced from CMM and capital allowances are no good when, because of the early stage of the industry and large development costs, there will be no profits for some time. Additionally, the industry is adversely affected by high licence rents, drilling and connection costs, all of which reduce the number of sites that are cost effective to develop and so prevent the industry from helping the Government tackle the methane problem.

  The industry will develop commercially viable sites, but this will leave 75 per cent of the methane untapped unless the Government provides some incentives.

  So far CMM has been excluded from all the instruments currently available to boost alternative energy production.

5.  THE EFFECT OF INCENTIVES

  Ministers have expressed strong support for the industry and the contribution it can make to helping the Government achieve its greenhouse gas and alternative energy targets, but the industry is still waiting to see what action will be taken.

  The options are firstly to exempt CMM generated power from the climate change levy. This is logical as CMM supplied for end use is already exempt. The potential benefit derived from making CMM generated power exempt from CCL is that an extra 30 sites would become viable generating 175 MW, and mitigating 4.6 million tonnes of CO2.

  For a comprehensive solution though, something similar to the renewables obligations is required. This could take the form of an Alternative Energy Obligation (AEO) which, like the RO, would not cost the Exchequer anything.

  This would allow for another 335 sites to be developed. These would have a generating capacity of 743 MW and would prevent 19.5 million tonnes of CO2e from escaping to atmosphere.

  If CCL were removed and an AEO introduced, then the total number of extra sites that could be developed would be 365, generating 918 MW and saving 24.1 million tonnes of CO2e.

  If all the potential sites were to become operational, then as much as 1.2 GW of electricity would be generated from CMM, the equivalent of one nuclear power station. This is more than the 834 MW total of power produced under NFFO and its sister projects up to June 2000.

  (See appendix A for breakdown of figures)

  CMM is a clean source of indigenous energy which has the potential of contributing an additional 1.2 GW to the country's electricity requirements by 2010, the same amount as a nuclear power station.

  There have been many expressions of support for the contribution the industry can make to tackling the CMM problem, but so far no definite proposals have been made.

  Incentives should be supplied through the RO or an equivalent Alternative Energy Obligation which together with exemption of CMM generated power from CCL, would make it possible to tap CMM at about 365 further sites mitigating 19.5 million tonnes CO2e.

6.  EMISSIONS TRADING SCHEME

  We recognise that it may take some time for a comprehensive solution along the lines of an RO to be put in place. In the meantime, whilst it is stressed that the Emissions Trading Scheme (ETS) Incentives Scheme is not a substitute for a comprehensive solution to the CMM problem as it does not offer the certainty required for investment, it still does offer the possibility of an incentive to develop some sites currently not commercially viable. How many will be brought within this range will depend on the incentive price fixed at the auction.

  Given that methane is escaping every day into the atmosphere, and the longer the Government delays acting, the more harm is being done to the environment, the ETC potentially offers a relatively quick means of encouraging further mitigation of this gas, provided that CMM is included in the Scheme from its start in April and is therefore in the Incentives Auction to take place in February. To date DEFRA has agreed that CMM may be included in the Projects part of the Scheme but, for any extensive potential benefit to be realised in terms of mitigating significant amounts of CO2, CMM needs to be included as a direct participant as this will apply faster and with more certainty. Such inclusion will directly affect the acceleration of the current roll out of coal mine methane sites around the UK, an impact that inclusion in the ETS as a project cannot provide.

  The industry is currently in discussion with DEFRA to overcome barriers to inclusion. What the industry fears is that another situation occurs as happened with the Renewables Obligation, where the rules were drawn up in such a way as to initially exclude the CMM industry from inclusion despite the fact that it could make one of the most cost efficient contributions to achieving the Government's alternative energy and greenhouse gas reduction targets. Through including CMM in the auction, there is a possibility that work could begin relatively soon on tapping more of the methane that otherwise will continue to emit to atmosphere.

  CMM development should be included in the incentives element of the ETS, from its commencement, as this will help mitigate CO2 emissions until the RO, and AEO or similar scheme can be introduced.

7.  ACHIEVING TARGETS

  The reason for the exclusion in the UK to date from any assistance of this gas mitigation technology seems to be that CMM has not been recognised as a major atmospheric pollutant and there was low awareness of the CMM industry.

  The Government appears to have got itself into a situation where it has too narrowly defined energies that should receive assistance given that its overall objectives are to improve the environment, tackle climate change and achieve security of supply.

  It has created a playing field that is not level, being tipped in favour of purely renewable forms of energy when there are other forms of energy that are able to more rapidly and cost effectively help the Government achieve its targets. CMM capture is closer to commercial development than currently available renewable technology except landfill gas. The provision of incentives could help the Government to meet the shortfall in renewable generation before offshore wind is developed commercially.

  CMM is a major contributor to the UK's greenhouse gas emissions and its capture to generate electricity will significantly reduce the level of these emission in a cost effective way within a relatively short lead time.

8.  COST EFFECTIVE

  ACMMO has supplied details to the DTI showing that exemption from CCL would cost a total of £13.7 million, and result in an additional CO2e mitigation of 4.6 million tonnes at a cost of £3 per CO2e tonne, an extremely low cost. In comparison, the whole CCL scheme is expected to cost £109 per CO2e tonne.

  A direct quote from the Government outline of the operation of the CCL is as follows: "The levy is expected to raise around £1 billion in its first full year (2001-02). The levy package is expected to lead to reductions in carbon emissions of at least 2.5 million tonnes of carbon a year by 2010".

  ACMMO has also supplied details to the DTI showing that inclusion in the RO, which is at no cost to the Government, would have a cost to the consumer of electricity of £13 per tonne of CO2e. Again, a very low cost compared to the overall cost of CO2e mitigated under the RO which is £84 per CO2e tonne. (Note: The CCL and RO cost calculations here take the full cost of the measure divided by the incremental, stimulated, extra emissions reductions.)

  Assisting the capture of CMM is a low cost method of tackling CO2 emissions, and therefore should go ahead without delay.

9.  GERMANY TAKES THE LEAD

  The German Government included mine gas in its Renewable Sources Act 2000, providing the industry there with a 5p/kWh incentive. As a result more than 80 planning applications have already been made for CMM to power plants on abandoned mine sites.

  Given that Germany has adopted this position, there is no reason to prevent the British Government from following their example. The EC position is as stated in a letter from the Commission on 6h August—"Its (Renewables Directive) definition of renewable energy sources in Article 2(a) includes landfill gas but not coal mine methane. Member States may find that is desirable to support or not to support methane recovery, depending on their particular national circumstances. We thus consider that while national measures may be desirable, in particular on environmental grounds, there are no current grounds for labelling coal mine methane as a renewable source of energy on a Community level."

  This would appear to open the way for the UK Government to take whatever action they wish to support CMM development.

  Given that Germany has included CMM in its renewables legislation and the EC Directive allows each country autonomy, there is no reason why the British Government should not take action to help industry tackle the methane emissions problem.

10.  COALFIELD COMMUNITY REGENERATION

  One effect of the development of pithead CMM plants is that they contribute to the economic regeneration of deprived coalfield communities. Projects launched so far have already provided more than £14 million of inward investment to help kick-start local economies in the East Midlands and Yorkshire.

  Coalfield community regeneration is a Government priority; CMM helps to drive this policy forward at no cost to the Exchequer.

11.  CONCLUSION

  With CO2 emissions apparently increasing, despite the Government's efforts, the potential removal of 32 million tonnes should be a welcomed contribution to the Government's CO2 reduction target before other alternative energy technologies are sufficiently developed to have a sizeable impact on the UK's energy production.

  Time is pressing—millions of tonnes of methane continue to escape into the atmosphere as long as this debate is dragging on.

December 2001



 
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