Speaker : Nigel YAXLEY, Vice-President, EURACOAL; Director, UK Coal Mining Ltd.

Coal currently covers almost 28% of power generation in the EU and this proportion will increase after EU Enlargement. In many Accession Countries, coal (hard coal and lignite) remains a major and reliable energy source. Modern power plants with high efficiencies already ensure clean and competitive generation throughout Europe.

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These modern technologies have the potential to contribute significantly to a sustainable future. The question is whether a balanced energy policy – safe, inexpensive and environmentally sound – would be threatened by one single priority : CO2 ?

Access to coal is easy, cheap and bears no political risk but requires more investment and technological development: Will European policy makers consider the potential of a modern coal and lignite industry and adopt a long-term attitude favourable to it ?

In addition to our usual participants, the dinner-debate was also attended by observers from the Accession Countries in the European Parliament and members of the Parliamentary Assembly of the Council of Europe.

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Learn Lessons from Energy Crises

Oil and gas are energy sources ensuring mobility and heating. Industrial countries import the major part of their oil and gas requirements so that these fuels are subject to substantial price and political risks.

Coal and nuclear energy form the fundamental basis for power generation. They have a price-stabilising effect and provide security of supply.

Therefore it is vital to achieve risk management through a balanced energy mix.

Coal's Significance to Power Supply

• In the EU 15 coal based power is particularly important to Germany 51%, UK 32%, Greece 71%, Spain 38%
• In the EU Accession Countries 67% is based on coal, particularly important to Poland 96%, Czech Republic 75%, Bulgaria 40%
• Steel and base material industries depend on coal

Coal is a crucial pillar of European energy supply.With enlargement, coal's significance will increase.

Coal in Europe - Lignite production, hard coal production and imports in Mt in 2002

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Power Requirements of EU 15 on the Increase

How are they covered?

• Power generation of EU 15 will be up 36 % until 2020
• Gas use will increase significantly in absolute and relative terms
• Coal-based generation will remain a major player

Huge Investments Required into Europe's Power Industry as from 2010

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Questions of Energy Policy

• CO2 reduction:The only issue? Which mitigation targets can our economy cope with?
• Consumer acceptance:If nuclear and coal were phased out, which energy sources will close the gap? How much more will consumers pay for environmental objectives?
• Security of supply:What consequences will increased gas consumption have on prices and security of supply? What happens when the wind doesn‘t blow?

These questions must be answered without any contradictions within a long-term energy programme. What are the possible contributions of fuel and technology?

Vision for Electricity Supply and CO2 Reduction in the Power Sector with Coal

Short term :

• Integration of coal industries of the Accession Countries

• Coal industries´ importance will increase in the enlarged EU
• Experience gained in the lignite industry in the new German federal states shows how core activities can survive the transition from a planned to a market economy
• Systematic concentration of sales into power generation (lignite+hard coal) as well as steel industry (hard coal)
• Adjustment of costs to compete in a liberalised market is the challenge

Adjustment process must avoid disrupting supply and must develop and maintain a sustainable coal industry

• Avoid disturbances in the electricity market; Emission Trading Could Have a Negative Impact

• The allocation of emission allowances must be
  • Free of charge
  • Sufficient in quantity
  • Geared to avoid premature plant closures
  • In addition: Sector-specific characteristics must be taken into account

Coal's position may change considerably as a result of the EU‘s environmental policy

Mid term :

• Efficiency enhancement through continuous modernisation

• Fuel switching from coal to natural gas in the power sector involves growing risks because :
• Energy import dependence will rise drastically
• Prices for electricity will grow significantly
• It hardly yields any benefits when the efficiency balance of power generation is considered in its entirety
• From a global viewpoint, CO2 mitigation will be small or may even be negated when Russia makes greater use of coal power plants to increase its gas export volumes

Gas Resources(in bn cbm)

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Double-click on the image to enlarge it

• Example of modernisation :

Lignite-fuelled power plant “Lippendorf"
Commissioning: 1998/99
Capacity: 1,874 MW
Net efficiency: approx. 43%
Investment: some € 2 billion
CO2 reduction: approx. 6 mill. t/a approx. -30%

Long term :

• Develop a technology pathway to ultra low CO2 Emission
  • If deep cuts in CO2 are needed, fossil fuels can form part of the solution
  • Technologies for CO2 capture in fossil-fuel power plants and CO2 sequestration could be exploited in some 30 years.
  • Efficiency of power plants using CO2 capture technologies is 6 - 12 percentage points lower than that of power plant processes without carbon capture. This accelerates the consumption of resources.
  • CO2 avoidance costs for a concept including sequestration are estimated at € 40 - 70/t CO2.

  Hence, this technology is a realistic alternative to renewable energy sources in the long term

EURACOAL’s Conclusions for Sustainable Power Supply

Short-term:

Adjustment process in the Accession Countries must avoid disrupting supply and must develop and maintain a sustainable coal industry

Allocation of emissions credits has to avoid disrupting the electricity market and threatening security of supply through premature coal plant closures

Mid-term:

Emissions Trading has to encourage a portfolio of investments including high efficiency coal plant and maintain a well-balanced energy mix

Long-term:

A “dash for gas” is not a long term solution. If “deep cuts” in CO2 are needed coal with carbon capture can be a realistic alternative to renewables

EURACOAL's Request to the Parliament and Commission of the EU

• Acknowledge coal as a part of a balanced energy portfolio in the EU
• Acknowledge the significance of low-cost energy from coal which is independent of political risks
• Acknowledge the importance of coal in both energy and employments terms in the Accession Countries
• Consider how the coal route has huge potential for improvement through investment
• Pursue policies that allow coal to be part of the solution – not the problem
• Engage with Euracoal on policy issues