Written evidence submitted by B9 Coal
1. ABOUT B9 COAL
1.1 B9 Coal is developing game-changing projects
in the field of carbon capture and storage, combining coal gasification
with highly efficient alkaline fuel cells from AFC Energy to create
first-of-a kind Integrated Gasification Fuel Cell (IGFC) power
1.2 AFC Energy's alkaline fuel cell achieves
60% electrical efficiency and operates at low temperature and
low pressure. The system has been designed for commercial application
and is therefore low-cost (the company has eliminated the need
for precious metals) and easy to manufacture and maintain. In
addition, the use of hydrogen allows the system to load follow
to meet peak energy demand.
1.3 With hydrogen as the feed-stock, fuel cell
power stations are not only highly efficient and flexible in output,
they are also fuel flexible. The system has the ability to switch
between and mix hydrogen produced from coal, gas, biomass and
electrolysis sources. Such characteristics offer strategic energy
security benefits in terms of utilising potential UK coal resources
as well as the ability for grid balancing and back-up for intermittent
sources of renewable electricity.
1.4 B9 Coal's pursuits have been underpinned
by a strategic partnership undertaken with Linc Energy, the world
leader in underground coal gasification. UCG technology potentially
gives access in the UK to an extra 17 billion tonnes of coal without
the major environmental impacts of conventional mining.
1.5 In October 2010 B9 Coal announced a partnership
with Powerfuel Power Limited, outlining plans to incorporate AFC
Energy's alkaline fuel cell at Powerfuel's Hatfield site. The
Hatfield project is among the most advanced CCS projects in Europe
and has been entered for the European Union's NER 300 funding
mechanism for new renewable and CCS projects.
2. B9 COAL AND
2.1 B9 Coal supports the concept of taxation
as a means of delivering a sustainable low-carbon economy by 2050.
However, taxation must be coupled with effective regulation and
support to ensure a swift and smooth transition to a decarbonised
power generation sector by 2030.
2.2 Budget 2011 included some positive elements
for B9 Coal and CCS deployment in general. We welcomed the commitment
to fund demonstration projects 2-4 through the Department of Energy
and Climate Change's competition. Other positive provisions included
the establishment of the Green Investment Bank which will begin
operations in 2012 with a tripling of initial capitalisation funds,
and the introduction of a carbon floor price which will underpin
low-carbon energy generation in the UK.
2.3 On CCS, the decision to fund the demonstration
projects from general expenditure has provided the industry with
clarification on Government commitment. However the coalition's
decision to fund demonstration schemes through general taxation
rather than a specific CCS levy could affect the "investability"
of CCS; the provision of a CCS levy could have contributed
to increased investor confidence in this novel industry. Furthermore,
this choice of funding may not enamour public opinion to a development
which could have otherwise been self-funded through a CCS levy
or similar mechanism. The general public are being faced with
massive cuts to public finances and have seen spending reduced
in areas such as benefits, healthcare and education, making the
decision to fund a relatively new technology difficult to stomach.
Government must therefore work to enhance public awareness on
CCS and other low-carbon energy technologies, in order to limit
the potential for future delays in deployment.
2.4 The establishment of the Green Investment
Bank will leverage an extra c. £18 billion in financing for
green initiatives, however this will have a relatively small impact
for an industry said to need between £200-£450 billion
investments by 2030 in order to meet Government carbon reduction
3. BUDGET 2011
3.1 Budget 2011 made significant provisions for
green innovation and the green economy, however it is difficult
to say whether the budget provisions will significantly further
the coalition's green objectives. It is noteworthy that these
measures have been introduced in light of cuts taking place across
the public sector which highlight the Government's commitment
to addressing the issues of climate change and energy security
in the UK. However, as regards CCS the funding for this "crucial"
technology has been rendered less bankable to investors as a result
of what can be termed a variation in Government accountancy arrangements.
3.2 Approaches to shifting the burden of taxation
from "goods" (eg labour) to "bads" (eg emissions)
and factors that need to be considered when designing and introducing
3.3 It is vital that such a shift in taxation
does not result in windfall profits for nuclear and existing renewable
generators; the ultimate purpose of this form of taxation should
be to incentivise the development of a low-carbon economy. However,
the Government must ensure that the burden of any new tax does
not adversely affect those who cannot afford it, ie consumers.
Fuel poverty is a key issue to be addressed in this regard, and
the Government must take the necessary precautions to maintain
access to affordable fuel for low-earners. Environmental taxes
should be structured in such a way as to incentivise investment
in green energy. The Government must be cautious and avoid an
investment hiatus in this sector or carbon leakage abroad.
3.4 It is vital that the Government employs the
right balance of mechanisms to achieve its environmental and social
objectives. Combinations of regulatory and fiscal measures are
necessary in this regard (ie taxes plus emissions ceilings).
4. THE IMPACT
4.1 The taxation system must provide small and
fledgling enterprise and industry with the necessary incentives
to develop; this may be in the form of lenient taxation or general
support and advice mechanisms. Low-carbon energy is an essential
area for growth, and the UK must take advantage of its competitive
advantage in this regard. It is essential that the UK supports
the green economy and avoids forcing green innovation to relocate
abroad to more favourable research and investment climates.
4.2 Taxation goes hand in hand with regulation.
This should include the provision of well-balanced measures which
ensure regulatory and fiscal constraints are not too stringent
and do not risk suffocating the system. The taxation system for
sustainable development should be progressive with the high tax
burden being placed on those with the ability to pay, ie large
industry players. Such a system would essentially supplement the
work of valuable programmes such as the CRC Efficiency Scheme
and the EU Emissions Trading Scheme.
5. THE PLAN
5.1 The ambitions outlined by the Government
in HM Treasury's Plan for Growth are crucial for encouraging the
development of an innovative green economy in the UK. The document's
focus on innovation, research and support for new and small businesses
is essential for the development of a sustained and prosperous
energy sector throughout the 21st century. The introduction of
the carbon floor price and the establishment of a Green Investment
Bank are valuable additions to the Government's green portfolio,
however it must be emphasised that further action will be necessary
in order to leverage the £200-£450 billion private sector
investment that this industry will need to meet legally binding
emissions reduction targets.
5.2 As a small company employing pioneering technologies
in its projects, B9 Coal would favour further support from Government
to share the risk-burden placed on fledgling industries such as
ours. It is therefore central to this issue that policy-makers
understand the liability which is unfairly being placed on entrepreneurs
across the green energy sector, especially given the potential
of enterprises such as B9 Coal to develop efficient power generation
technologies at home in the UK to the benefit of the entire UK
5.3 B9 Coal would favour the introduction of
fiscal measures designed to incentivise investments in sustainable
energy and clean technologies which will further the development
of a low carbon energy sector.
5.4 The UK has real green growth potential due
to its strategic advantage over other countries and regions (with
regard to location, resources, skills etc.) and must ensure this
opportunity is not lost. Without Government incentives for investment
in this area there is a likely risk that advanced technologies
and enterprises could relocate abroad to more favourable investment
and regulatory climates. In light of the UK's reduced competitiveness
in recent years the alternative energy sector could provide us
with the opportunity to regain economic prominence and compete
with emerging economies such as China who are excelling in this
field. B9 Coal is a British company utilising AFC Energy's British
technology in the effort to tackle climate change. This enterprise
will provide employment opportunities in its operational and manufacturing
pursuits as part of wider economic expansion in the United Kingdom.
5.5 It will therefore be fundamental that Government
policy is formulated in such a way as to ensure the right projects
are financed as part of the coalition's green growth plans. It
must ensure that this funding is not open to abuse and utilised
in the financing of generic forms of private enterprise which
will not impact on development of this crucial industry.
6. GREEN INVESTMENT
6.1 B9 Coal welcomes Budget 2011's announcement
on the establishment of the Green Investment Bank with an advanced
date of operations. The GIB cannot be commented on in detail until
its structures have been further defined. However, this is a positive
step taken by the Government and has been underpinned by increased
funding and a commitment to the speedy introduction of capitalisation
and loaning capabilities.
7.1 To conclude, B9 Coal welcomes the provisions
included in Budget 2011 and the Plan for Growth which indicate
Government commitment to the further development of the UK's alternative
energy sector. However, we would warn against the Government becoming
complacent in the context of budget cuts across the public sector,
and would like to emphasise the need for accelerated action with
regard to low carbon power generation.
7.2 The UK has signed ambitious emissions reduction
targets into law as part of the Climate Change Act, and has therefore
taken a driving seat in the global action to tackle climate change
and its associated effects. It is therefore vital that the UK
Government backs up these actions with a fiscal and regulatory
system capable of incentivising investment and development in
the green economy.
20 April 2011