EU gives coal the cold-shoulder

In a remarkable meeting in Brussels on Wednesday, the Coal Industry appealed for fair and decent treatment from the EU, and went away empty-handed.

The event was the 16th Round Table on Coal, intended to allow a dialogue between legislators and industry.  But in a packed room — thirty round the table and perhaps double that in chairs around the wall, or standing, or sitting on the broad window-ledges — I could count only three MEPs.

The event was chaired by Bogdan Marcinkiewicz, a Polish EPP MEP (Poland has a strong dependence on coal); prominent Green MEP Claude Turmes was  invited as a speaker; and I went, in my new rôle as UKIP Spokesman on Industry & Energy.

The rest seemed mostly to be industry people from the coal or power sectors, though some will have been parliamentary staff.   As a euro-realist swimming against the glutinous tide of europhoria in Brussels, I rarely expect approval, but on this occasion I was delighted to receive wild applause from this industry audience when I had chance to speak up.

The first speaker Mr. Alan Svoboda, of CEZ Group, made two key points.  First, that “Carbon Capture & Storage” (CCS), long seen as the answer for fossil fuels in our CO₂-averse age, seems to be on the back burner.  Full scale commercial operation is unlikely to happen any time soon.  Secondly, that the renewable technologies by which Brussels hopes to achieve its green policy targets would require conventional back-up, and that insufficient thought and investment had been given to that.

So far as I know, no serious thought at all has been given to it in Britain.  But industry experts suggest that the back-up needs to cover around 90 to 100% of the projected capacity of intermittent renewables.

The second speaker Mr. Wolfgang Dirschauer of Vattenfall spoke of the work being done by the coal industry to deliver flexibility, to enable it to complement renewables.  They hope eventually that coal will be as flexible as gas.  But flexible operation of either coal or gas means higher costs and higher emissions per unit than if the plant is run efficiently and continuously.  A couple of recent reports show that the combined system of wind-power-plus-gas-back-up may save little or no emissions compared to gas alone.

The third speaker, Mr Bogdan Janicki of CEEP (Central European Energy Partners, www.ceep.be) appealed to the talisman of CCS, but this had been so devalued by the previous speakers that it had lost its power and credibility.  He showed a chart of the price-per-ton of CO₂ emissions under the EU’s ETS scheme, ranging from €8 to €28, and asked very reasonably how the industry was supposed to make an investment case to its banks for new plant when there is such huge commercial uncertainty.

ETS is described as “a market mechanism”, but it’s clearly not.  It’s set by policy-makers, who are quite prepared to tinker with it (as with George Osborne’s “floor price” for emissions). So regulatory uncertainty is piled on commercial uncertainty.  You can’t make forty-year investment decisions with this uncertainty.

The EU institutions are so in love with their renewable dream that they have written off coal entirely — although it accounts for over a quarter of European generation, and will continue to do so.

Claude Turmes helpfully suggested that the UK need not worry about conventional back-up for our targeted 30% renewables, since we already have plenty of gas in place to offer the necessary variability.

Yes, Claude, but we’re closing down something like 40% of our UK generating capacity — coal and nuclear — in the next ten years, so we need new capacity.  We can’t afford to use the gas plants just to back-up renewables.

And besides, Claude, if we already have enough gas to back-up wind — why bother to build the wind in the first place?