Clean Coal For Europe

Coal is Europe’s most abundant indigenous energy source. In order to meet the challenges of climate change and security of supply, Europe has to make full use of its potential.

Energy policy is high on the European agenda. Security of supply, competitiveness and environmental sustainability should all be pursued in a balanced way. Climate change, price volatility and import dependency are the basis for numerous considerations for the future of Europe’s energy sector. A more rational, i.e. more efficient, use of energy is a major concern in this debate. In addition, the pressure to achieve extremely ambitious targets for the utilization of renewable energy sources bears the risk of pushing coal out of the EU’s energy mix.

In the view of FECER – The European Federation of Executives in the Sectors of Energy and related Research – such a move would deprive Europe ultimately of one of its cheapest energy sources and with that undermine the Community’s desire for a secure and sustainable European energy supply. This is particularly true if one looks at potential alternative options. A dash for gas would increase the import dependency and so reduce security. The support of renewable energy sources in some cases is not cost effective, and often electricity based on renewable energy sources is not available when needed. On top of all this, some European member states are involved in a controversial debate regarding on the future of nuclear energy.

Against this background FECER would like to share its view on the future of coal within the European energy mix and at the same time reconfirm its support for the EU’s initiative to establish an energy policy for Europe.

  1. Security of supply at affordable cost

As part of a balanced energy supply for the generation of electricity, coal plays a particularly important role due to its secure availability and competitive strength.

The availability of coal in the EU guarantees a substantial contribution to supply of electricity through the existing power station portfolio in the medium term. A significant part of this capacity will be supplied by domestically sourced coal. The use of coal effectively limits risks linked to price, supply, transport and even terrorism. Coal production and consumption in Europe are significant. Almost 60 % of the EU’s consumption is supplied by indigenous sources of both hard coal and lignite. The EU has an efficient infrastructure of ports, waterways and railways at its disposal. It is cheap and safe to transport and stock coal. Power can therefore be generated close to consumers. Leaks and network risks are thus avoided, providing stability to the electricity supply system.

Not only does coal make a major contribution to supply, it also defines a price benchmark for the power sector. This benchmark is an important macro-economic element as intensive competition between fuels for power generation makes a significant contribution to a functioning EU internal market for electricity. In addition, coal extraction and utilization as well as energy intensive production result in the creation of local prosperity. This is significant for many regions. Delocalisation of high value production to regions with lower environmental standards might be advantageous for producers with a short term economic outlook, but is detrimental from an economic and environmental perspective at EU level. Furthermore, European high tech from the coal chain is a valuable export sector. Coal mining and coal-based electricity generation therefore have additional industrial policy implications.

  1. The unique role of coal for power generation in the enlarged Europe

Electricity supply in EU-25 is mainly based on nuclear (32 %), coal (30 %), hydro (15 %) and gas (17 %), although these averages hide significant differences between individual member states. Coal plays an important role in many EU member states. All estimates assume that the demand for electricity will increase in the EU. It is difficult to say today whether electricity consumption will increase by 30 % or 50 % in the next 25 years. Even with the EU’s energy efficiency targets, it must, however, be noted that Europe currently consumes a lot of electricity and will need even more in the future.

A power gap is developing in Europe because of increasing demand and the need to close ageing power plants. The EU’s growth targets for renewable energy sources are extremely ambitious; 20% of energy consumption from renewable sources (covering electricity, heating & cooling and biofuels) by 2020, which may mean that as much as 35 % of the electricity generation will be based on renewable energy sources, according to Eurelectric. This still leaves a substantial gap to be filled by conventional fuels, including gas, which emits less CO2 than coal.

The EU’s energy policy for Europe presents a vision of a low carbon economy in its targets for Green House Gas (GHG) emissions reductions of 20% by 2020 and of 30% with appropriate world-wide support. It has put in place a market-based mechanism, the EU Emissions Trading Scheme (EU ETS), to drive forward such reductions by placing a cost on creating CO2 emissions. Its review of EU ETS needs to establish a long-term scheme to create stability of the pricing mechanism for carbon. This will be needed to ensure the financial viability of future plant using clean coal technologies.

  1. Clean Coal Technologies

FECER supports the European Commission in its efforts to develop clean fossil fuel power technologies. Carbon capture and sequestration (or storage) (CCS), applied to an Integrated Gasification Combined Cycle (IGCC) plant, will provide a high degree of flexibility by having the potential to produce CO2-free electricity and environmentally friendly motor fuels, hydrogen and synthetic gases. Resorting to clean coal technologies is vital for the acceptance of coal. However, available technologies for CCS and flue gas cleaning require development and implementation of Community laws and regulations.

A key element of the strategy to reduce carbon emissions is the modernisation of existing power plants to improve efficiency. The construction of highly efficient new coal power plants is appropriate where replacement is needed or to cover increased demand for electricity. Reduced use of scarce resources and fewer emissions of pollutants can be achieved within the framework of a general market-based modernisation strategy with a long-term EU ETS.

The capture and storage of carbon dioxide has remarkable potential. In European and international research programmes, the development of technologies to capture and store carbon dioxide are ready for implementation and are economically achievable by the year 2020. Such wide ranging efforts would create sufficient security able to deal with the need for further reductions of CO2 emissions without questioning the reliability of fossil fuels. A technical option therefore exists in the electricity sector, in addition to nuclear and renewable energy sources, for the use of gas and coal in the long-term with dramatically reduced CO2 emissions.

A further option to be used is the co-firing of coal stations with biomass of up to 10 %.

Such technological advances should also reduce CO2 emissions globally, if they are applied to new plants in countries such as China and India where electricity growth will continue to be based on their indigenous supplies of coal.

  1. Conclusions

At a time when energy is at the top of the EU agenda, it is important that Europe exploits the full potential of its most abundant indigenous energy source, coal, which already has a major role in member states’ economies and in electricity generation. However, to become part of the EU’s low carbon economy it is essential that the industry embraces and the EU provides the support for the development of new technologies to reduce CO2 emissions and for carbon capture and storage from coal-fired generation.

The recent decision by the EU to have up to 12 power stations with carbon capture and storage is a step in the right direction.

7 June 2007