Memorandum by the Coalfield Communities
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
2. ENERGY REVIEW
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. LOST OPPORTUNITIES
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,
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
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 PaperTowards a European strategy for the security
of energy supplywas 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. A CONTINUED
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
5. NEW INVESTMENT
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. CHOICE OF
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
9. GLOBAL ISSUES
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. IN CONCLUSION
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
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
Coalfield Communities Campaign
DTI (1993) The Prospects for CoalConclusions
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.