The UK’s clean coal bridge

Tony Lodge, Centre for Policy Studies, UK, argues that clean coal should remain a vital part of the UK’s energy mix.

Coal-fired power continues to play a crucial role in the UK generation portfolio, providing 41% of electricity generated across the country in 2012. This contribution from the existing coal generation fleet, as well as the associated supply industry and infrastructure, is absolutely essential in providing secure, flexible and affordable energy supplies to the UK’s households and businesses. In particular, retaining coal as part of the UK’s energy mix will provide a hedge against future volatility in the gas market that would otherwise be passed directly on to the consumer.

A new campaign in the UK argues that it is vital that the remaining lives of these unabated coal-fired power plants are managed effectively and optimised to enable maximum contribution to the UK’s power requirements over the next decade, through to the transition to the future low carbon generation portfolio, which must include coal with carbon capture and storage (CCS). This would ensure continuity and progression in the skills, capabilities and resources required to support the development of clean coal with CCS as part of that future generation fleet. But the right policy signals are needed from government for building the much needed investor confidence in the coal supply chain, including indigenous mining, ports and transportation infrastructure.

With the support of an ambitious, government-led CCS strategy, coal has the potential to provide secure, affordable low carbon energy through to 2030 and beyond. Indeed, the UK Committee on Climate Change in its carbon budget assumes a significant role for CCS for coal and gas in the UK’s 2030 energy mix.

The scale of coal’s current contribution and its future potential cannot be underestimated. Yet, in contrast to most of the main industrial competitor nations, the future of the coal mining sector is under serious threat from an energy policy framework that is driving premature closure of the current coal fleet, which was largely built in the early 1970s. At the same time, the construction of new high efficiency CCS-ready coal-fired power plants is effectively prohibited due to new legislation called the Emissions Performance Standard.

The UK has also failed so far to deliver the momentum required to seize the opportunity presented by CCS technology. This is despite the significant progress on deploying large-scale CCS projects in other countries (particularly the US) and the strong national advantages that makes the UK one of the best places to deploy the technology.

It is argued that a new strategy for coal is urgently required as a key element of national energy policy alongside gas, nuclear and renewables. After all, the UK Government announced a gas generation strategy in November 2012. A new coal strategy will allow a managed transition to CCS, thereby ensuring coal’s continued contribution to security, affordability and diversity of supply in meeting Britain’s energy needs, while sustaining highly skilled employment for some 10,000 employees across the coal resource sector.

There are a number of key policies that the UK Government can deploy to create a seamless bridge from existing unabated coal generation to new coal with CCS. The policies will maintain investment and operations at UK underground and opencast coal mines. Without this bridge, the mining industry and access to the UK’s considerable coal resource will be lost and become stranded.

The transition to CCS

The policies that could be adopted by the UK Government include the following:

• Urgent and serious consideration should be given to holding the draconian UK Carbon Price Floor (CPF) at 2014 levels.The original purpose of the CPF was to help stimulate investment in low carbon technologies, such as CCS; however, the planned trajectory of CPF and resulting divergence from EU carbon prices will drive early closure of existing coal-fired power plants, risking UK energy security and driving up power prices, without encouraging investment in low carbon technology or impacting global emission levels.
• The design and implementation of the electricity capacity market should provide existing coal-fired power plants with a realistic expectation of recovering the investment needed to ensure continued reliable and flexible performance, while meeting the costs of adhering to EU environmental legislation and the CPF.Coal-fired power plants can provide a cost-effective contribution to power security and price concerns over the next decade. Conversely, the early demise of coal will materially add to the risk of security issues and price spikes. It will also increase dependence on foreign gas imports.
• Emission Limit Values (ELVs) under the EU Industrial Emissions Directive (IED) should be grandfathered until 2030 with no further tightening of emission limits under the EU Large Combustion Plant Directive.This could then encourage over 10 GW of existing coal-fired power to continue through to the 2020s and bridge coal with CCS.
• Coal with CCS should be accelerated and expanded through the urgent development of two demonstration plants under the current CCS competition.

Adoption of these policies would see an effective transition in the UK from unabated coal consumption to coal with CCS, the retention of 10,000 direct jobs and the creation of highly skilled roles at new CCS plants, in coal mining and throughout the supply chain. It can guarantee energy security and affordability of electricity supply for the UK and provide a hedge against gas price spikes. The window of opportunity to deliver this is now.

Written by Tony Lodge. Edited by Jonathan Rowland

Read the article online at: https://www.worldcoal.com/special-reports/07052014/the_uk_clean_coal_bridge_coal812/