‘Clean coal’ – Another Financial Device for the City?

“Climate change!” was Ed Miliband’s answer at Labour Party Conference as to why a 17y old should support Labour!  Fantastic news!  Also great news that he wants a new way of organizing the economy because we are certainly going to need a very different approach if we are going to address climate change. (1)

In particular, it is clear that the private energy sector has no financial interest in ‘powering down’ energy use, and every interest in utilizing the crisis of greenhouse gas emissions to justify charging more.

Significantly, there is enormous traction in the concept of ‘clean’ coal, which would facilitate and vindicate energy production from the cheapest, most carbon-intense, globally abundant resource  (coal stocks are estimated to be sufficient for at least 147y).

However, there is a bit of a problem with Carbon Capture and Storage (CCS) which is the necessary technology to create ‘clean’ coal:

CCS has not as yet been proven as a commercially or technologically viable method of mitigating the impact of CO2.

 The intention of this article is to explore whether ‘clean’ coal is likely to fulfill its promise …  or whether, it is a means of leaching tax payers’ money into the private sector for another white elephant, like the NHS computer or PFI.

The big unanswered question is why the EU and our politicians are going down the route of pursuing an expensive, untried technology when there is a researched, and evidence base, that by investing in existing renewable technologies,  the UK could be zero carbon, and possibly a net exporter of energy, by 2030 (2)(3).  As Kevin Stewart SNP said in the Scottish Parliamentary Green Energy Debate (02.06.11), the road block to the expansion of the renewable economy is “a lack of political will in Parliament”.

The UK’s largest coal plant, Drax, alone produces over 20 million tonnes of carbon dioxide each year…. The most comprehensive assessment, made by Peter Viebhan of the German Aerospace Centre suggests that CCS can reduce greenhouse gas emissions from coal power stations by little more than two thirds. (4)

Think Left’s articles  (4)(5) cover many of the environmental and climate change reasons for opposing the expansion of the coal mining industry.

Coal hurts communities, destroys wildlife and countryside and contributes massively to climate change.  

 

The CARBON CAPTURE MYTH

The coal industry is touting ‘Carbon Capture and Storage’ as a solution, claiming the carbon produced when coal is burned can be captured, then stored safely. However, the industry itself admits the technology to do this does not exist, and will not be ready for at least 15 years even if they can make it work. The scientific consensus is that our emissions must be falling quickly by 2015, so 15 years is too late.   (6)

Unlike many in the current Tory-LD government, the Labour government fully accepted that climate warming is both real and created by man-made greenhouse gas emissions.  Ed Miliband (during his time at the Department of Energy and Climate Change DECC) successfully steered the UK’s Climate Change Act (2008) through parliament. This Act sets a target of reducing greenhouse gas emissions by 80% by 2050, with an interim target for CO2 reduction of at least 26% by 2020.

Ed Miliband also placed a requirement for limiting CO2 emissions on the proposed Kingsnorth coal-fired power station; and although they were pretty minimal requirements the proposal was abandoned (7).  This was indicative of the general unwillingness of power companies to act responsibly with regard to climate warming.  It may also have reflected the lack of confidence in CCS as a potential technology.

 

Who is in favour of the development and expansion of the coal industry with Carbon Capture and Storage? 

The answer would seem to be just about everybody, except environmentalists and climate change activists.

This includes the EU, the TUC, the last Labour government and:

Companies likely to bid for UK CCS demonstration competition:

Powerfuels, E.On, Scottish Power, Scottish and Southern Energy, Centrica, Progressive Energy,
Conoco Philips, RWE

Members of Futuregen:

American Electric Power, Anglo American, BHP Billiton, China Huaneng Group, CONSOL Energy, E.ON,
Foundation Coal, Luminant, Peabody Energy, PPL Energy Services, Rio Tinto Energy America, Southern
Company Services, Inc, Xstrata Coal   (6)

In addition, Chris Huhne is very enthusiastic on behalf of the Coalition government :

‘We’ve been playing catch-up in other parts of the green economy where other countries have implemented bolder, more progressive policies. We will not make the same mistake with CCS. I know that business needs certainty and stability and I firmly believe the UK is well placed to lead on CCS and the coalition Government is committed to delivering 4 large-scale demonstration projects.’

(2010, CCS Senior Stakeholder Conference)

The Labour government, in a bid to stimulate research by the private sector announced a competition, the prize being guarantees of huge government investment.

‘The individual processes involved in CCS, which are capture, transport and storage, are not new but have yet to be demonstrated together on a commercial scale. This has been identified as a barrier to CCS deployment. In the 2007 Budget, it was announced that a competition would be launched to develop the UK’s first full-scale CCS demonstration’

(DECC, 2009).

At least 84 different companies are involved, organized into various consortia; the whole process appearing to be orchestrated by Tony Blair’s favourite global management consultancy, McKinsey & Company, who also acted with regard to the involving the private sector within the NHS.

‘CCS requires long lead times before it can be deployed at full scale. It also required large investment in single projects’

(McKinsey & Company, 2008)

 

 

What are the arguments in favour?

It is unarguable that it is desirable to develop technology in the furtherance of reducing carbon dioxide emissions.  Apart from the proposed usage in coal-fired power stations, there are many industries, like steel, chemical, cement, which also need to be de-carbonised.

All the TUC and LP arguments about the desirability of expanding and re-opening coal mines are contingent on the capacity of CCS to prevent additional carbon dioxide (CO2) being released into the atmosphere (8).

The reasoning seems to be that ‘clean’ coal could be a driver by which those areas of the country, still affected by the closure of the pits 30y ago, could be re-vitalised, and employment created.  This argument, however, discounts the potential impact that government investment in the green economy, on the scale proposed by Zerocarbonbritain 2030 (2), could equally well create in those areas of high unemployment.

 

The Practicalities of CCS

 Capturing CO2 in significant volume is viable but expensive.  A simple outline of the consensus is the construction of a grid of pipelines which would collect CO2 from around the UK.  The CO2 would then be deposited into sub-sea depleted oil and gas fields.  This has a significant advantage for the industry in that it would be possible to retro-fit the high pressure natural gas pipeline infrastructure.

It is of particular significance that CCS is also closely associated with EOR (or Enhanced Oil Recovery) where the CO2 pumped into ageing oil fields makes more oil available, which will in turn produce more emissions when burned.

However, these practical considerations are only part of the package.  Commercial factors are more significant for private corporations than mitigating climate change. Companies’ first duties are to their shareholders and to put profits before any other concerns.

On the commercially positive side, as has been said, injection of CO2 into depleting oil fields could enhance oil recovery.  There is also the potential for storing continental CO2 (on-shore storage incurs objections following the suggestion that it could be associated with triggering earthquakes).  In addition, very few countries are looking to develop this technology and UK companies could expect to be amongst the world leaders with huge potential returns in China and India.

On the negative side, coal does not have a guaranteed future financial return… unless they can obtain substantial price guarantees.  Currently, coal is cheaper than renewables but this will probably reverse as the renewable technologies mature. The under-sea storage is estimated as sufficient for only 35y.  Furthermore, there is concern that nuclear fusion may be realized within the next 30y.  It is likely, therefore, that CCS would be a ‘bridging’ or transition industry’ with only one generation of infrastructure.  CCS is also inefficient. It will reduce the efficiency of  coal-fired power stations; and it is not without its own environmental impacts and potential hazards.

Scottish Coal’s profits down 90% on last year

September 25th, 2011

Scottish Coal look to be in trouble as their parent company, Scottish Resources Group, announced a 90% slump in their profits, which plunged from £28.4 million to just £2.6m in the year up until the 26th March.

The company’s director blamed a drop in coal prices of some 10% as being responsible. Coal sales were flat at four million tonnes, with turnover falling from £229.9m to £209.2m, and all this despite production increasing from 3.4 million tonnes to 3.5 million tonnes.

http://coalactionscotland.org.uk/

All these factors add up to technology that may be considered too commercially risky to develop without huge government subsidies and guarantees (9).

The environmental perspective of CCS with respect to climate warming.

From the environmental perspective, ‘clean’ coal is a disastrous distraction.  It facilitates ‘business as usual’ for the power companies, but vast sums of tax payers’ money are, and will be, diverted away in the form of government subsidies.  The focus is not on measures to reduce consumption (‘powering down’), the development of renewable technologies and the HVDC grid (10) …. And the focus is not on a New Green Deal fostering substantial job creation from new green industries.

 

The UK spent nearly 20 per cent of its GDP to prop up the financial sector, but just 0.0083 per cent in new money on green economic stimulus.

http://www.neweconomics.org/projects/green-new-deal

So it seems:

1.  ‘Clean’ coal is not really very ‘clean’ …. up to 40% additional coal would be needed because of the extra energy required to capture greenhouse gases and make-up for the reduction in efficiency of output.  There are also all the carbon emitting processes involved in the expansion of mining and transport of coal; the unknown risks of CO2 leakage from saline or on-shore aquifers, and the burning of additional oil recovered by the use of CO2 in Enhanced Oil Recovery.

2.  The time line is totally unrealistic either to avoid CO2 emissions creating dangerous levels of climate warming, or to reduce our dependence on oil which is likely to reach peak flow before 2015 (9).

3. ZeroCarbonBritain 2030 and Desertec are independently evidenced as strategies which would reduce carbon emissions, reduce oil dependency and could be implemented quickly to provide a secure, safe energy supply… the costs of which appear to be relatively similar to current energy prices and would become cheaper as the technologies mature (8).

4. Government investment is diverted away from reducing energy needs and developing renewable energy.  Both of which would create new jobs, a new manufacturing base and growth in the economy.  The UK needs to institute a mass insulation program of the existing housing stock.  Build sustainable new housing and retrofit the old.  Reducing the energy needs of the UK is a priority.  In addition, there is an urgent need to upgrade and extend a national and international HVDC power grid to link together renewables such as solar, wind, geothermal, hydro and so on, across the UK and internationally(10).

If something doesn’t make sense, we need to ask who would benefit?

Professor Michael Hudson writes:  “When you find this kind of distortion being popularized and even written into law, there always is a special interest at work.”(9)

 Writing specifically about the banking crisis, he continues:

‘…the EU is turning out not to be the peaceful and basically socialist project anticipated half a century ago, when the European Economic Community was formed in 1957. It is a financially bellicose, extractive attempt to create a financial oligarchy and impoverish Europe, stripping the assets of debtors to pay creditors.’

So is it that, like the banks, the power providers are too big to fail?

Is this also the reason for promoting nuclear?

Is it that the financial oligarchy are determined not to lose the milch cow of centralized energy and the leverage with government that that confers?

Is this the battle that Ed Miliband meant when he spoke about the vested interest of the big six energy providers?

Where does this leave tackling climate warming and the coming energy crisis of peak oil? (10)

 

…. I appreciate economic models, but we should also heed common sense. An activity that … pollutes groundwater, toxifies soil, destroys mountains, and threatens to render the planet uninhabitable is not, by definition, cheap. If the the way you do your accounts makes it look cheap, then something is wrong with the way you do your accounts. If your politics gives it a place of privilege, something is wrong with your politics.

The costs of coal, so long unheeded and undercounted, are extraordinarily high. And they are only rising. Meanwhile, the costs of alternatives to coal are falling. A wise culture would, as hockey star Wayne Gretsky used to say, skate to where the puck is going.

 http://www.grist.org/list/2011-09-29-economists-every-1-of-electricity-from-coal-does-2-in-damage-to-

 

 

 

(1)  Peak Oil and Neo-Liberalism Think Left

(2) Zero Carbon Britain

(3) Desertec Solar Energy

(4) The Black Stuff was our Heritage, Green is our Future Think Left

(5) The Coal-ition Think Left

(6) Coal Action Scotland

(7) Soaking up the Sun Think Left

(8) TUC and Clean Coal

(9) DECC Framework for the development of Clean Coal

(10)Renewable Energy and HVDC Grids Think Left

(11)Naked Capitalism Michael Hudson Debt Deflation in US

(12) Soylent Green, George Osborne and Plutonomy Think Left

15 thoughts on “‘Clean coal’ – Another Financial Device for the City?

  1. A fantastic article. This makes it very clear that CCS is a financial venture being sold as an environmental green policy when nothing could be further from the truth. All the evidence points to this, and one wonders why some are choosing to ignore the evidence. great post, Sue, superbly researched.

  2. Devastating stuff. It was quoted that the Labour Left favoured the opening of mines on North East TV – no doubt an attempt to soil the argument for the democratisation of the utilities essential to life, which was being debated – nothing could be further from the truth. There is no early 20th century romanticism in the scientific and democratically reasoned progressive alternative to laissez faire.

  3. This is very concerning and incorrect. Perhaps there are some in the Labour Party unaware of facts and this recent information. Think Left is on very much on Labour’s Left and is clearly opposed for the reasons which Sue makes very clear. I am sure that the Labour leadership is aware of these facts. I hope so, anyway!

  4. http://www.guardian.co.uk/environment/2011/oct/02/green-deal-energy-saving-bankrolled-by-consortium

    ‘Critics have warned that incentives are insufficient to drive take up and meet the target of 14m homes by 2020, given that smaller existing schemes have had relatively few subscribers even when free.

    The consortium members are: British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and SSE.’

    It is noteworthy that many of the same companies are involved in this inadequate not-for-profit scheme (providing loans for home insulation) are in the running for huge government subsidies from ‘clean’ coal.

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