Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum by the Coalfield Communities Campaign


  1.1  The Coalfield Communities Campaign (CCC) is the all-party association of more than 80 local authorities in all the coalfield areas of the UK. Since the mid-1980s CCC has taken a close interest in energy policy and the potential impact on the UK coal industry and the communities that depend upon it. Throughout that period the organisation has consistently argued for a continued role for coal and that investment in clean coal technology should be a key element of energy policy.

  1.2  CCC has already made a submission to the DTI consultation on clean coal technology. Much of the text in this document is based on that previous contribution but CCC believes investment in cleaner coal addresses some of the key issues on which the Trade and Industry Select Committee inquiry is focused.


  2.1  The "root and branch" review of energy policy underway (by the PIU as well as the inquiry by the Trade and Industry Select Committee) indicates a willingness to look again at policies that have perhaps become entrenched or that are now being overtaken by events. Security of supply issues relating to the spread of fuel types and fuel sources had already moved high up the agenda before recent world events. CCC therefore welcomes the government's decision to look seriously at commercial scale demonstration plant for clean coal in the context of reviews taking place in the UK and by the EU.


  3.1  A reappraisal of the energy options for the UK is long overdue. In 1993 (DTI, Cm 2235) government policy dwelt on the transition from a nationalised to a privatised coal industry and provided a framework for stability over that period. It did not offer much for the long-term and was non-committal about clean coal technology. A Trade and Industry Select Committee report at the time that recommended "support for clean coal demonstration projects" was largely ignored. (HMSO, 1993, page 112).

  3.2  Returning to the issues in 1998 (DTI, Cm 4071) some consideration was given to security of supply issues and after a short-lived restriction on consents for gas stations, New Electricity Trading Arrangements and power station divestment were introduced to try to correct market distortions. Again the Trade and Industry Select Committee recommended assistance for clean coal demonstration plant (page 106). Yet clean coal technology remained on research and development status only and encouragement was given (through emissions policy) to fit FGD to more power stations.

  3.3  However, even though it had been established that existing coal stations produced the cheapest electricity, the main limitations for continued use were clearly environmental. The market itself could not produce a solution to that problem.

  3.4  By the end of the 1990s energy prices and markets once again began to show the same kind of volatility that had produced crises in the previous 30 years. The European Green Paper—Towards a European strategy for the security of energy supply—was a timely reminder that longer-term energy issues needed to be considered anew. Along with the proposals to renew state aid to the coal industry, the European Union's attention has turned to finding ways of maintaining a primary energy base in Europe.


  4.1  There appears to be a quickly emerging convergence of opinion from all quarters that if present trends continue there will be an unacceptably high dependence on gas for power generation coupled to an equally risky continued dependence on oil for transport.

  4.2  If the government wishes to address the problem then alternative sources of power will be needed to provide a balanced energy portfolio. There is sufficient weight of opinion expressed in the contributors to the PIU energy review, including from the DTI itself, to suggest that coal will be required to retain a significant role in power generation over the next 50 years. Because coal can compete on price but faces increasing environmental constraints, the only answer is to build new clean coal stations.


  5.1  Investment in the energy sector in the UK is probably at its lowest for many decades and given the uncertainties of the market, the private sector is unwilling to take long-term risks preferring instead to sweat the assets acquired during the privatisation process. Risk-averse companies, constrained by shareholder pressure, are unlikely to embark on any significant investment in new energy technology.

  5.2  Even though the cost gap between new gas stations and new coal stations is closing, coal still loses out in terms of CO2 emissions. Financial assistance of one sort or another is needed to kick-start most new, more environmentally acceptable technologies in power generation. It is already accepted that renewables require assistance through the Renewables Obligation and the Climate Change Levy. In the past the nuclear industry was subsidised by the NFFO. There is therefore a track record of financial incentives that have worked and could easily be adapted and applied to new energy technologies in general, including coal. In any event, some element of risk needs to be removed before any significant investment occurs in any new form of power generation.


  6.1  CCC recognises that an evaluation of the best options for clean coal plants would appear to be the first requirement if public money is to be spent wisely. However, it does not seem necessary at this stage to tie support to just one specific technology or one specific form of financial assistance.

  6.2  The Trade and Industry Select Committee pose a number of questions but the intention here is to focus on just three issues relating to the positive contribution clean coal technology can make to ensure diversity and security of supply —

    1.  Is demonstration plant the way forward and if so which type?

    2.  Are there other ways of promoting the use of clean coal technology?

    3.  What are the world-wide potential environmental and economic benefits?

  6.3  CCC takes the view that, given the time frame to plan and build new plants, and the lack of progress over the last decade, the need for investment in cleaner coal plants is urgent. If the object of the consultation is just to decide on which technology should be supported in a single plant it will fall well short of what is needed. It is important to take clean coal development forward both with existing and brand new plants.


  7.1  This should involve retro-fitting of FGD to additional coal-fired plant in the first instance to make sure there will be sufficient coal capacity supplying the grid over the next five-to-ten years. "Incentives" using emissions limits as implemented by the Environment Agency have a role but more may be needed. There are three plants with FGD and one under construction. Another six existing plants have indicated they may also invest in clean-up technology with the possible outcome of over 14GW of capacity with FGD. However, there is still some way to go and the government will need to ensure these plans are taken forward.

  7.2  Crucially, if there are to be substantial long-term improvements to power generation from coal it is important to aim high. It will mean building demonstration plants that take clean technology to a higher stage of development, in terms of efficiency, emissions control, and commercial viability. A coal gasification process, which may involve IGCC, could provide the biggest step forward. Ideally such a project should also provide a route through to carbon capture or sequestration in order to address the fundamental long-term problem of all fossil fuels.

  7.3  At the same time clean coal development could also mean retro-fitting, where appropriate, other technologies and re-powering of older coal plants with more modern equipment (eg fluidised bed boilers). There may be a sound argument for constructing coal gasifiers to provide feedstock to currently operating CCGTs. New super-critical thermal plant may also have an important role to play, especially if an operator was willing and able to build such plant fairly quickly.


  8.1  Just as flexibility is required in terms of plant options, the type of support could also differ depending on the projects. Demonstration plant will perhaps require some direct government support. Other options for retro-fitting or re-powering can be achieved through financial incentives where the operator chooses the most appropriate technology.

  8.2  Options for clean coal technology can proceed on current power station sites or perhaps other brownfield sites where there is local access to fuel source and appropriate infrastructure. This makes sense in terms of the acceptability under the planning system, infrastructure advantage, and sustainability. It also could assist in the much-needed economic development of areas hit by previous job losses in the energy sector or other heavy industries.


  9.1  Because the world has huge reserves it is inevitable that coal will be used extensively for many decades to come. The question is not whether coal will be used but how. In the context of world energy production and therefore climate change policies, cleaning up coal will be paramount. The UK drastically reduced its emissions by switching fuels but this cannot be achieved on the world stage.

  9.2  The DTI identified a £30 billion market for the UK alone in its Energy Paper 67. Developing commercially proven clean coal stations in the UK will have a benefit for UK generators but also plant manufacturers. Improving the efficiency and reducing emissions in countries likely to continue with a huge coal burn (eg China and India) will be the foundation for reducing emissions in line with international commitments.


  10.1  CCC supports the appraisal of options for cleaner coal underway by the DTI and welcomes the significant review of overall energy policy being conducted by the PIU for the Cabinet Office.

  10.2  CCC believes that of all the options under consideration, clean coal technology is vital to secure a balanced portfolio. In order to achieve overall policy objectives that take account of economic, environmental and security issues it will require some intervention from government. Market-led policies over the last decade or more have delivered lower prices but place little or no value on the environment, security or diversity. Financial incentives to encourage upgrading coal stations and support for clean coal demonstration plant are very important steps towards achieving those objectives.

  10.3  Coalfield Communities Campaign takes the view that:

    —  clean coal technology is viable as one of a number of sustainable technologies;

    —  demonstration plant has an important part to play in establishing that technology;

    —  government funding for such plant is desirable;

    —  in addition, consideration should be given to other financial instruments that can encourage development of such technologies to upgrade coal-fired generation on a time scale that will involve no loss of security or diversity.

  10.4  It is hoped that this Trade and Industry Select Committee inquiry will conclude, as it has done in recent years, that investment is needed in more efficient, cleaner coal power stations.

Coalfield Communities Campaign

October 2001


  DTI (1993) The Prospects for Coal—Conclusions of the Government's Coal Review. Cm 2235

  Trade and Industry Select Committee (1993) First Report: British Energy Policy and the Market for Coal.

  DTI (1998) Conclusions of the Review of Energy Sources for Power Generation and Government response to fourth and fifth Reports of the Trade and Industry Committee. Cm 4071.

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