APPENDIX 27
Memorandum submitted by the World Coal
Institute
SUMMARY
1. The need of the UK, for safe, affordable,
environmentally friendly and reliable energy will require a mix
of fuels and a revolution in the development and deployment of
new technologies across nuclear, renewables and fossil fuels.
2. The current UK over reliance on gas and
oil, and its new status as a net importer of energy, should serve
as a warning against future over reliance on any one fuel source
or the geographic/political region that produces it. Nuclear and
renewables can certainly be part a responsible energy mix, but
they are not alone the solution.
3. Recent independent reports—notably
those from the World Energy Council, the International Energy
Agency and the Intergovernmental Panel on Climate Change—have
confirmed that fossil fuels, and particularly coal, will be needed
well into this century. The UK will continue to need coal for
basic electricity (heating and lighting) and industry growth.
These same reports confirm that coal can be used in an environmentally
responsible manner; they indicate that carbon capture and storage
can enable continued economic growth and significant mitigation
of harmful CO2 emissions.
4. While much needs to be done to ensure
adequate investment in many mitigation options, investment in
the development and rapid deployment of clean fossil fuel technologies
is manifestly in the world's best interests. These technologies
offer a win-win solution with the potential to maintain the value
of strategic hydrocarbon assets, fuel social and economic development
in developed and developing countries alike, and ensure near zero
emissions to the environment from fossil fuel use.
WORLD COAL
INSTITUTE
5. The World Coal Institute (WCI) is a non-profit,
non-governmental association and the only international body working
on a worldwide basis on behalf of the coal industry. Membership
of the WCI is open to coal enterprises and stakeholders from anywhere
in the world, with members represented at Chief Executive level.
More details on the WCI and its membership and can be found at
www.worldcoal.org. Members include: PT Adaro (Indonesia), Anglo
Coal, Australian Coal Association, BHP Billiton, BHP Mitsubishi
Alliance, Coal Association of Canada, Coal Mining Association
of New Zealand, Confederation of UK Coal Producers (COALPRO),
Carbones del Cerejon (Columbia), PDVSA Carbozulia (Venezuela),
Consol Energy, Indonesian Coal Mining Association, Glencore International,
Joy Mining Machinery, Mitsubishi Development, National Mining
Association (US), RAG Coal International, Rio Tinto, Solid Energy
(NZ), Swedish Coal Institute, Total, and Xstrata.
6. WCI's key objective is to provide a voice
for coal in international energy and environment policy and research
discussions. Members of the WCI are undeniably and transparently
pro-coal, but have explicitly committed to:
— co-operate in supporting sustainable
development, including economic growth, social development and
improved environmental outcomes;
— promote cleaner coal technologies
and the responsible use of coal;
— encourage improving mine health and
safety; and
— practice corporate social responsibility.
ISSUES
The UK "generation gap" and the need
for clean coal
7. The UK has a large demand for energy
(equivalent to almost 235 million tonnes of oil) of which coal
supplies 17%[22].
Contrary to popular opinion, in the case of electricity, coal
accounts for 37% of total generation and more than half of this
comes from domestic coal. This brings a high degree of security
and price stability to an energy market increasingly reliant on
imported natural gas.
8. In 2004, the UK ceased to be an exporter
and became a net importer of energy, clearly undermining its energy
security profile. The extent of the generation gap facing the
UK can be indicated by the fact that over the next 25 years, EU
demand for electricity is expected to rise by almost 60%[23].
Bridging this gap will likely require investment in new nuclear
and renewables. However, given the infrastructure lead times and
technical uncertainties involved in those sources, the UK would
be unwise to ignore both its substantial domestic reserves of
coal (220 million tonnes[24])
and the international trade in affordable coal from many politically
stable and friendly nations[25].
The UK has the opportunity and expertise to use its existing coal
reserves in an environmentally sound manner, through the clean
coal technologies[26]
being developed and deployed under the just-announced UK Carbon
Abatement Technologies Strategy and by programmes in other nations.
This vital strategic reserve could underpin UK energy security
for many years to come. This would help limit import dependency
on foreign sources of uranium and other fuels, and delay the growing
British dependency on Russian gas in particular.
9. Commonsense and national interest dictates
that investment decisions on new energy sources (eg nuclear and
renewables) should not ignore the long-term strategic demands
of British energy security. For electricity generation, this means
the development of the most efficient, cost-effective and environmentally
responsible mix of energy sources; this means:
— safe and cheap nuclear;
— cheap and reliable renewables; and
10. All will require substantial investment
and government leadership. None alone will bridge the generation
gap facing the UK and none alone will produce the energy security
that the UK needs. However, a sensible investment programme in
all three will meet the UK's strategic energy and environmental
objectives.
Clean coal technologies offer solutions
11. Clean coal technologies are available
that can deliver substantial, large-scale reductions in CO2
emissions in electricity generation. These include carbon capture
and storage technologies that allow fossil fuels to be used with
minimal emissions—the CO2 being put back underground
from where it came. The UK Department of Trade and Industry is
to be commended for the release (June 2005) of its Carbon Abatement
Technologies Strategy. The £25 million funding announced
is an important investment in realizing the potential of CCS and
can complement work being undertaken in a range of countries in
this area from which the UK can benefit.
12. Researchers at Princeton University
have made an assessment of CO2 emissions might be stabilised
over the next 50 years to skirt the worst consequences of global
warming. Emissions would need to be trimmed by seven billion tonnes
of carbon per year. From their assessment, they have identified
15 strategies, each of which could deliver carbon savings of at
least one billion tonnes (1 Gt) by scaling up technologies available
today. Three relate directly to CCS:
— Capture and store emissions from
800 coal power stations worldwide.
— Produce hydrogen from coal at six
times today's rate and store the captured CO2.
— Capture carbon from 180 coal-to-synfuels
plants and store the CO2.
13. These three strategies alone could account
for almost half the carbon savings needed by the world. By way
of contrast, other means of delivering 1 Gt of CO2
emissions savings could include building 700 nuclear power plants
(1000 Mw each) or building 300,000 wind turbines (5Mw each) covering
a land area equivalent to Portugal.
14. The implication for UK energy, environment
and investment policy is that investment decisions should not
divert necessary funds from this most important area of practical
response to climate change.
Carbon Capture and storage (CCS)
15. The International Energy Agency has
identified CCS as an important transitional technology that "can
co-exist [with renewables and nuclear] as part of a cost-effective
portfolio of options for reducing CO2 emissions from
energy production."[27]
16. The most recent authoritative and independent
work on CCS was produced last month by the Intergovernmental Panel
on Climate Change. The WCI commends that report to the Committee
and draws its attention to several key findings addressing previous
concerns with regard to CCS and support the early development
and deployment of the technologies involved.
Potential storage capacity
17. The potential storage capacity of underground
formations is substantial. According to the Intergovernmental
Panel on Climate Change (IPCC):
Available evidence suggest that worldwide,
it is likely that there is a technical potential of at least about
2,000 Gt CO2 of storage capacity in geological formations.
In most scenarios for stabilization of atmospheric
greenhouse gas concentrations between 450 and 750 ppmv CO2
and in a least-cost portfolio of mitigation options, the economic
potential of CCS would amount to 220-2,200 Gt CO2 cumulatively,
which would mean that CCS contributes 15-55% to the cumulative
mitigation effort worldwide until 2100, averaged over a range
of baseline scenarios. It is likely that the technical potential
for geological storage is sufficient to cover the high end of
the economic potential range, but for specific regions, this may
not be true.[28]
18. A "technical potential" capacity
of 2,000 Gt CO2 is more than enough to sequester the
world's CO2.
19. The UK is well placed to exploit CCS
because it has large sources of CO2 located within
reasonable distances of geological formations suited for long
term storage, with the economic advantage of enhanced oil recovery
(EOR). The North Sea alone may provide enough geological capacity
for all the CO2 produced from European power stations
into the second half of this decade while increasing the economic
life of the North Sea oil resource.
Leakage potential
20. Most concern about CCS has focused on
the potential for leakage of CO2 from storage sites.
Leakage would depend upon a variety of factors but most critically
upon the choice of storage: ocean storage, mineral carbonation,
or geological. In relation to deep ocean storage; the IPCC has
found "leakage would be gradual over hundreds of years";
and in relation to mineral carbonation "the CO2
stored would not be released to the atmosphere". Most importantly,
in relation to geological storage (eg the North Sea), it found:
Observations from engineered and natural analogues
as well as models suggest that the fraction retained in appropriately
selected and managed geological reservoirs is very likely to exceed
99% over 100 years, and is likely to exceed 99% over 1,000 years.
For well-selected, designed and managed geological
storage sites, the vast majority of CO2 will gradually
be immobilised by various trapping mechanisms and, in that case,
could be retained for up to millions of years.[29]
Costs and benefits
21. The cost of a full CCS system for electricity
generation from a newly built, large-scale fossil fuel based power
plant depends upon a number of factors, including the characteristics
of the power plant and the capture system, the specifics of the
storage site, the amount of CO2, and the required transport
distance. Accepting these uncertainties, the IPCC has found:
Application of CCS to electricity production,
under 2002 conditions, is estimated to increase electricity generation
costs by about 0.01-0.05 US dollars per kilowatt hour, depending
on the fuel, the specific technology, the location, and the national
circumstances. Including the benefits of EOR would reduce additional
electricity production costs due to CCS by around 0.01 to 0.02
US$/kWh.[30]
22. Retrofitting existing power plants with
CCS could be expected to lead to higher costs and reduced efficiencies.
23. The net reduction of emissions to the
atmosphere through CCS depends on the fraction of CO2
captured, the increased CO2 production resulting from
loss in overall efficiency of power plants or industrial processes
due to the additional energy required for CCs, any leakage from
transport, and the fraction of CO2 retained in storage
over the long term. The IPCC has found:
Available technology captures about 85-90%
of the CO2 processed in a capture plant. A power plant
equipped with a CCS system (with access to geological or ocean
storage) would need roughly 10-40% more energy than a plant of
equivalent output without CCS, most of it for capture and compression.
For secure storage, the net result is that a power plant with
CCS could reduce CO2 emissions to the atmosphere by
approximately 80-90% compared to a plant without CCS.[31]
(Bolded emphasis added by WCI.)
State of play with regard to technological development
24. The basic technologies needed for CCS
have already been developed, however there are development needs
to produce cost effective integrated systems. The development
of the technology necessary for geological storage (such as that
which would be used in the North Sea) is more developed than for
oceanic storage. The IPCC has a produced a useful table which
summarises the state of play for the various components which
would need to be brought together for CCS to be realised.
Current state of technological development of CCS
system components[32]
25. This tables indicates that most of the
necessary components for geological storage (eg North Sea storage)
are classified as either "Mature market" or "Economically
feasible under specific conditions".
Competition vs co-operation
26. It is a myth to assume that either the
UK's or the world's 21st century energy needs will be met by any
one energy source. It is a myth to assume that any energy source
is without cost or challenge and will not require heavy investment
and government leadership to overcome present imperfections. The
WCI rejects the sterile and outdated paradigm which sets different
energy sources against one another, and so should government.
27. Getting to a new energy economy, without
massively disrupting industry and society along the way, will
require a level of co-existence and even co-operation between
the various energy sources that only a decade ago might have seemed
imaginable. The role of government should be to manage that transition
to ensure that:
— industry and society are not disrupted
by abrupt energy shifts;
— the heavy lifting base load capacity
of coal and other fossil fuels supports economic and social development
and allows renewables and newer energy forms the time to overcome
their present imperfections; and
— the use of current energy forms,
such as coal, are supported by the latest technologies in energy
usage such as carbon capture and storage so that they can be used
in an environmentally benign manner.
RECOMMENDATIONS
28. The World Coal Institute recommends
the Committee:
— Encourage investment in the existing
fleet of coal-fired power stations to further reduce sulphur dioxide
and carbon dioxide emissions:
— By actively encouraging the use
of flue gas desulphurisation;
— By supporting a supercritical
boiler retrofit project;
— By reviewing the rules that limit
biomass co-firing.
— Promote the construction of a fleet
of new integrated gasification combined cycle (IGCC[33])
power stations where coal can be used cleanly and efficiently
and, ultimately with near-zero emissions.
— Support funding for research, development
and commercial demonstration of clean coal technologies, including
those that are needed to capture and store CO2:
— The benefits for such investment
can go beyond electricity generation (eg hydrogen produced from
coal at IGCC power stations can play an integral part in reducing
emissions from the transport sector).
October 2005
22 Statistical data on UK energy supply and demand
comes from the Digest of United Kingdom Energy Statistics 2005,
Department of Trade and Industry, London, and from monthly
DTI website updates. Back
23
European Energy and Transport Trends to 2030, Directorate-General
for Energy and transport, European Commission, 2003. Back
24
UK proved reserves at end 2004 as reported in BP Statistical
Review of World Energy, June 2005. Back
25
In contrast to oil and gas and uranium, coal is produced in about
50 countries around the world and remains the most affordable
and reliable of base load fuels, supported by an existing international
trading architecture and technical expertise. Back
26
Including carbon capture and storage. Back
27
p 19, Prospects for CO2 Capture and Storage, International
Energy Agency, 2004. Back
28
p 18, Special report on Carbon Dioxide Capture and Storage:
Summary for Policymakers, Intergovernmental Panel on Climate
Change, 25 September 2005. This was approved by the 8th Session
of IPCC Working Group III on 25 September 2005 and is the latest
available at the time of drafting of this memorandum. However,
it is "Subject to final copy editing, reference and footnote
editing, and figure editing." Back
29
p 23, IPCC. Back
30
p 14, IPCC. Back
31
p 4, IPCC. Back
32
Table S.2, p 11, IPCC. Back
33
In IGCC systems, coal is not combusted directly, but reacted
with oxygen and steam to produce a syngas composed mainly of hydrogen
and carbon monoxide. The syngas is cleaned of impurities and then
burned in a gas turbine to generate electricity and to produce
steam for a convention steam power cycle. IGCC lends itself to
carbon capture and storage technologies to ensure that carbon
does not enter the atmosphere. Back
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