CCTG Briefing: Coal, CCS and the Energy Bill

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TUC Clean Coal Task Group

Coal & CCS in the Energy Bill

Coal's transition to a low carbon energy supply

The TUC supports a binding CO2 target for the Energy Bill. At peak times during the winter period, coal fired generation has supplied over 50% of the UK's electricity demand. We believe that clean coal with carbon capture & storage (CCS) has a key role to play in the transition to a low carbon future.

Support for investment in CCS technology for power and industry - including regional capture networks such as that proposed for the Aire Valley - must form a key part of the Energy Bill. The Government should urgently reinstate its commitment to at least four CCS projects.

It will be impossible for the UK to reach its CO2 objectives for energy supply with a new dash for 'unabated gas'. The Energy Bill measures on capacity payments and contract arrangements need to ensure a secure place for coal power with CCS in the transition to a low carbon economy.

Coal in the UK energy mix

Since November 2011, coal has been the fuel of choice of UK power companies. Coal fired stations provide secure and affordable energy, and a highly flexible complement to renewable energy, especially from wind power.

The high level of coal in the energy mix has benefitted electricity consumers through lower prices. Simply taking the difference between carbon, gas and coal prices, UK generators have made a cost saving of over £1.2 billion since November 2011.

The future for coal-fired and gas-fired power stations lies with carbon capture & storage (CCS) technology.

So it is essential that the Government's Energy Bill helps to secure a long-term role for the UK's coal fired power capacity in the transition to a low carbon energy system. Clean coal with CCS has a viable role to play in the UK's energy mix. Future reliance on 'unabated' gas-fired power stations without carbon capture will lock in carbon emissions until 2045.

Existing coal plant could continue to provide affordable, stable, flexible and secure electricity out into the 2020s when replaced by new carbon capture and storage (CCS) stations.

Coal in the transition

European environmental legislation requires coal plant to cut emissions or close early. The EU's Large Combustion Plant Directive (LCPD) will force several coal stations, with a total of 8 Gigawatts (GW) of capacity, to close by the end of 2015.

The follow up Directive, the Industrial Emissions Directive (IED), will progressively require the remaining power stations to lower emissions of sulphur dioxide and nitrogen oxides. Options include major investment in new technology, closure, or limiting running time before closing. This means a further decline in coal burning.

UK carbon prices and uncertain future markets mean that many power stations will close well before 2023.

Yet today's coal stations are vital in providing cost effective and flexible back up for the increasing volumes of intermittent wind and inflexible nuclear capacity on the system. They also provide a bridge until CCS technology is proven and rolled out in the mid-2020s.

UK coal mining in transition

UK coal mining employs 6,000 people in skilled employment, currently producing around 18 million tonnes of coal a year from 5 deep mines and from surface mines - about one-third of UK coal consumption. But faced with a declining demand for UK coal from power companies, it will be forced to reduce output and employment, and eventually close, well before new demand is established from coal-fired power stations with carbon capture.

Once the UK's mines close, the jobs and skills will be lost to the UK forever. Once coal demand returns with the advent of CCS, the UK would be reliant solely on imported coal. Its indigenous industry will have gone.

Secure place for coal and CCS in the transition

The key to maintaining an on-going energy market for coal until it can be replaced by clean coal power with CCS is for the Energy Bill to provide for a transitional role for coal that enables power companies to prolong the life of their coal plant. One option is the Capacity Mechanism, proposed in the Bill.

'Capacity payments' are designed to ensure the UK has reliable energy supplies, providing enough flexible generation as a backup to intermittent renewables, as renewable energy expands to a greater role in our energy mix. Existing coal plant currently performs this back-up role extremely well.

It is therefore essential that the Energy Bill Capacity Payments are available to all forms of flexible generation, including coal. Rather than a new 'dash for gas', the Government should back a dash for CCS - both for power and industry. CCS for coal and gas stations and to capture CO2 emissions from heavy energy industries such as steel, chemicals and cement in industrial regions, is a crucial part of our low carbon energy future.

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