Memorandum by Clarke Energy Limited
We hold very strong views that the Trade and
Industry Select Committee should give utmost consideration to
the support of Coal Mine Methane (CMM) as a source of methane-based
Coal Mine Methane is the waste gas trapped within
disused coal mines, of which there are around 900 abandoned mines
in the UK. Gas will continue to escape for the next 50/100 years,
at a minimum level of 300,000 tonnes/year of CMM.
The gas has a global warming potential 21 times
greater than carbon dioxide and makes a significant contribution
to the UK greenhouse gas emissions.
By 2010 with some incentives there could be
an additional 300 projects in operation with a capacity of around
1 gigawatt. It should be noted that the German Government has
recognised CMM as a Renewable Energy Source and is giving it an
incentive worth 5p/kWh. As a result over 80 planning applications
have been made for CMM power plants in Germany, leaving the UK
standing. At present it is commercially viable to develop only
a minority of the disused mine sites, and a financial stimulus
similar to that offered in Germany is required here to develop
We therefore thoroughly commend the Trade and
Industry Select Committee to strongly consider CMM as a viable
economic and supportable source of alternative fuel, for economic,
environmental, and strategic reasons. There is no basis for this
commodity being held outside a Renewable Obligations type support
mechanism for price. The benefits in such treatment are plainly
evident and significant.
The general view from inside the industry is
that there is concern to ensure our energy policy and strategy
for the future is clear and achievable. There have been instances
where initiatives taken in good faith have not delivered, and
where market conditions have been affected by government action,
or the contrary. For example;
The Climate Change Levy (CCL) remains largely
ineffective with many exclusions providing certain industrial
sectors with the ability to stand outside its intended effect.
A counter argument that it is a form of taxation on manufacturing
industry can be understood, where large energy users are involved,
but this is not the point. The intent was to support and develop
efficient generation in the UK. The whole purpose of CCL it seems
with the Renewables Obligation was to encourage environmentally
friendly forms of electricity and to discourage carbon release
into the atmosphere, which causes climate change.
For example, Combined Heat and Power (CHP) is
an efficient environmentally friendly method for generating electricity,
but recently it has become cheaper to pay for electricity and
to accept CCL implications, rather than lose money by burning
expensive natural gas and justifying large capital expenditure
on plant and equipment.
Consequently, UK government support to CHP as
an efficient method of power generation is presently non-effective,
without some form of price support, grant aid, or tradeable benefits.
Indeed, the recent debate in the House of Commons (led by Andrew
Robathan MP) eloquently supported this view.
The need to ensure we balance our energy needs
sensibly and strategically with a more responsible and enforceable
approach to control of emissions is critical to achieving our
With regard to specifics.
1. Given the imminent dependence of the UK on
energy imports, how can the UK maintain a secure energy supply?
What mix of fuels would maximise security?
In the short to medium term, we will be vulnerable
to energy imports with the security implications that go with
that. Encouragement of our indigenous industry with the opening
up of local (North Sea) gas fields presently undeveloped would
support UK independence, and nullify the effect of overseas dumping
into our market.
Development of embedded generation schemes throughout
the UK would support environmentally friendly, very efficient
and independent electricity generation, at lower cost and by efficiency,
greener. In association therewith, a greater role for "green
energy" and renewables including biomass, biogas and wind
has to be encouraged to spread risk with the inclusion of CMM
as a supported fuel for power generation.
2. Is there a conflict between achieving security
of supply and environmental policy? What is the role of renewables,
and Combined Heat and Power schemes?
There should be little or no conflict. There
is no reason environmentally why green energy cannot be produced
the majority of the time through renewables, with more fossil
fuel-based generation always being available as backup/base load
to maintain central supply as necessary.
Enactment of Renewables Obligation legislation
is critical and urgently needed to provide price support, linking
in Coal Mine Methane in a similar way to ensure that technology
is brought to bear under a similar regime.
CHP as an accepted efficient and environmentally
friendly method of electricity generation must be further supported
to ensure that its accepted benefits are translated into early
action within the industry to support the Government's already
stated and stretching CHP targets. Much has been done in support
of CHP, but action so far has remained ineffective. People are
walking away from it, and Government has to act to ensure that
this industry requires economic support as highlighted in the
findings of OFGEM's report on NETA and the smaller generators.
3. What scope is there for further energy conservation?
Energy conservation is unlikely without the
public recognising its value and the implications of waste. In
California for example, the effect of price increases upon deregulation
meant energy reduction, with a consequent reduction in demand
on the industry. Complete deregulation of the Industry in Europe
is essential for supply and demand to reach equilibrium here as
capacity reduces as plant ages, and demand grows.
This of course reinforces the case for increased
development of local embedded generation plant for generation
nearer the point of use, saving on expensive transmission costs
and associated investments, improving efficiency and maintaining
flexibility. Such diversification will also reduce risk.
Increased generation from CMM plants and CHP
in the UK will also be part of this diversification strategy.
4. What impact would any changes have on industrial
competitiveness and on efforts to tackle fuel poverty?
Industry having access to efficient forms of
electricity generation must have beneficial effects on competitiveness.
The converse is also true of unreliable supplies at high cost
when demand well exceeds supply. A properly managed and balanced
approach to diversifying the nation's portfolio of embedded generation
capacity is absolutely critical to achieving such a sensible,
and strategically sound, balance. The benefits on fuel poverty
are complex but self-evident.
5. Is any change of Government policy necessary?
How could/should Government influence commercial decisions in
order to achieve a secure and diverse supply of energy?
(a) Support CHP effectively and therefore
(b) Encourage renewables as an alternative
complimentary fuel source and accelerate our renewable obligation
legislation. Wind power to be encouraged where possible and planning
(c ) Take a sensible pragmatic view that
Coal Mine Methane needs similar price support as proposed under
Renewables Obligation, if it is to develop as a valuable commercial
fuel. There are currently five generating projects in operation
generating 30MW and these benefit the environment by capturing
emissions equivalent to the removal of around 160,000 cars from
the road. By 2010 with some incentives, there could be an additional
300 projects in operation with a capacity of 1 GW. Both politically,
environmentally and commercially, this has to be a supportable
(d) Take care to ensure environmental emission
standards are raised, maintained and enforced to encourage efficient
generation. No more coal burning generation for peak lopping.
(e) Ensure drivers to encourage embedded
generation are created, and eliminate present constraints like
high connection costs, planning etc.
26 October 2001