Coal power closures cast pall over UK mines
LONDON Oct 31 (Reuters) - Britain's coal mines could see demand collapse in the 2020s if old power stations shun costly retrofits required by EU law because higher fuel and carbon costs will make generation from the fuel uneconomic, an industry lobby warned on Thursday.
By the end of the year, utilities will have to notify European Union member state governments on whether they will give a new lease of life to their coal-fired power plants, without which Britain's centuries-old coal mining industry is likely to see a huge decline in output.
"In the worst case scenario there could only be two power stations operating in Britain 10 years from now, consuming as little as 3 to 5 million tonnes of domestic coal, compared with 20 million tonnes currently," said Phil Garner, director general of British coal producers association CoalPro.
Power generators will have until end of this year to tell the British government how they intend to comply with EU pollution laws, though they can change their mind up to the start of 2016. After that date, plants will have operating hours restricted if they have not installed emissions reduction technology.
Around 15 gigawatts (GW) of Britain's coal-fired capacity will either convert to biomass, opt to close in 2023 or upgrade to comply with tightening air quality restrictions, said Bryony Worthington of Sandbag, which monitors climate and energy policy and is a legislator in the upper house of parliament.
Without incentives such as minimum prices for coal-fired power and generous subsidies for carbon capture, observers say utilities are unlikely to spend the hundreds of millions of pounds required to install equipment by 2020 to cut levels of particulate pollution in half to comply with the EU's Industrial Emissions Directive (IED).
"Retrofitting to comply with the EU directive would be a bit like putting an expensive new gearbox in a 1960s car. You sort out one major problem, but operating costs creep ever higher as old components have to be repaired or replaced," said a power industry source, who used the work for E.ON UK.
E.ON's British subsidiary is one of the few utilities that has confirmed it will opt in to the IED, which aims to curb sulphur dioxide and other particulates blamed for causing respiratory illness and premature deaths.
Most of Britain's main utilities have yet to decide on whether to fit additional environmental technology onto their ageing coal-fired power plants, citing ongoing uncertainty about the electricity prices they can charge during times of peak demand in a so-called capacity market.
Scheduled rises in Britain's levy on carbon emissions and the likelihood that coal prices will recover later this decade could mean that coal-fired power becomes less competitive well before 2020, Reuters calculations show.
But supporters of coal say there is a strong economic and political case for revamping old coal power stations and operating them when demand is high and supply from renewables is low, particularly if there are delays to the construction of new nuclear power stations.
"These plants could be vital to supply so keeping them in the energy mix could be a price worth paying," said Paul Baruya of the IEA Clean Coal Centre. (Reporting By John McGarrity)
- Target stores' customers hit by major credit card attack
- UPDATE 3-Saab wins Brazil jet deal after NSA spying sours Boeing bid
- As Modi storms into India's election, a quiet alternative emerges
- Facebook, Zuckerberg, banks must face IPO lawsuit: judge
- U.S. prosecutor defends treatment of Indian diplomat |