Our demonisation of coal is out of step with our competitors
Britain has almost turned its back on the fuel of the industrial revolution after going its first week since 1882 without needing coal for power generation. Some campaigners want more action and are now calling for the end to all fossil fuel use. However, abandoning hydrocarbons entirely without proven alternatives would be virtue-seeking folly.
Coal has been on the decline in the UK for many years. The cheap but carbon-intensive fuel accounted for just 5pc of total power generation capacity last year, down from about a third in 2014. Subsidised renewable projects such as wind farms and solar parks have partly made this transition possible. However, without natural gas-fired turbines providing vital baseload, the lights would go out.
“Renewable energy is clearly making up more of the UK’S power generation than it did just a few years ago,” said Joe Aldina, head of coal research at S&P Global Platts Analytics. “But there is a wide gap between going for a week without coal during a low point for electricity load and a high point for renewables generation, and phasing out coal completely as the UK plans to do.”
Coal use in the UK has become the soft target for climate campaigners and policymakers seeking to greenwash their credentials. They have a point. Coal produces about 50pc more carbon dioxide than gas when burned in power plants and the falling cost of clean renewables has further undermined its place in the national energy mix. Mitigating climate change will require reducing the volume of coal burned globally, although the UK’S consumption is barely relevant in this context.
However, coal still has some useful advantages as an emergency backstop to ensure Britain’s economy has reliable supplies of affordable electricity during periods of extraordinary peak high demand. Wind turbines are kind to the planet
but are unreliable without the ability to store power on an industrial scale. Awkward spikes in electricity consumption could also become more frequent if electric vehicles become a primary source of personal passenger transport in the future.
Coal has no geopolitical baggage. The fuel is generally sourced from stable producers such as the US, Eastern Europe, Australia and Indonesia, unlike oil and gas imported from the politically volatile Middle East, or Russia.
Of course, nuclear could provide the strategically important baseload capacity, but at a significant cost. The $30bn cost of building Hinkley Point C on the Avon has proved how divisive atomic energy remains as an alternative. Britain’s seven remaining coal plants are on average 45 years old and can be run down with little additional investment, although complying with air-quality rules in 2020 could be expensive. Maintaining these turbines as an emergency backstop of last resort is still prudent.
“Although they now make up a smaller part of the power grid, coal plants will continue to be used over the next few years, especially during the winter, cold snaps and periods of low wind,” said Aldina. Coal is cheap as a fuel of last resort and in abundant supply globally. The Platts CIF ARA 6,000 NAR assessment of thermal coal prices – a benchmark for the fuel in Europe – has fallen by a third in the last six months to close to $60 (£46) per metric ton. Despite the complex web of carbon taxes, balancing instruments and green inducements enforced by the government and Ofgem, energy experts say coal still has a role.
‘China and India are expected to continue burning huge quantities to generate cheap electricity’
“It’s a stretch to say that this recent news means the UK is much closer to that goal,” said Aldina. “It’s also notable that even on the recent days with high renewables generation, natural gas-fired generation has been the largest source of generation in the UK, meeting 40pc to 50pc of load. In other words, the UK grid is still dependent on fossil fuels.”
But some experts and mainstream politicians seek to reduce the role of fossil fuels almost entirely in the UK economy without the use of expensive and unproven carbon capture and storage. The committee on climate change – which advises Parliament – has recommended the country reduces net carbon emissions to zero by 2050. Labour leader Jeremy Corbyn – who in 2012 advocated reopening coal mines if they could be made carbon neutral – now is calling for a national emergency on the issue.
Meanwhile, Chancellor Phillip Hammond wants to end the use of natural gas in heating new homes, while Michael Gove wants coal house stoves banned.
Of course, renewables can displace hydrocarbons. If the UK reaches 30 gigawatts of offshore wind capacity by 2030 this would equate to removing the need for 272 standard cargoes of liquefied natural gas (LNG) a year, or 54million metric tons of coal, according to calculations by S&P Global Platts.
However, the demonisation of fossil fuels, and especially coal, among UK policymakers is out of step with many of the country’s international competitors. Germany – Europe’s largest economy and most powerful nation – still burns coal to generate significant volumes of competitive electricity for its vast industrial manufacturing sector. About a third of the country’s power is generated from coal and lignite. Although Berlin plans to reduce coal dependence, its targets will be hard to achieve.
Poland generates 80pc of its power from coal and is resisting the EU’S dogmatic campaign to force member states to reduce net greenhouse emissions to zero by 2050.
Meanwhile, coal remains a vital fuel powering the world’s fastest growing low-cost manufacturing economies. China and India are expected to continue burning huge quantities to generate cheap electricity. Global coal demand is seen remaining stable through to 2023, accounting for about a quarter of the energy mix, according to the International Energy Agency.
Coal still has an important role still to play in powering global growth and providing electricity for a population expected to reach almost 10 billion people by 2050. It can still have at least a small place in the UK’S energy mix as a fuel of last resort for years to come.