Coal – make an opportunity out of a crisis
That every crisis brings an opportunity applies in spades to the dire situation of UK Coal, our biggest coal producer. UK Coal has been in acute financial difficulty following the disastrous fire at Daw Mill. Collapse of UK Coal would wipe a reported £360m off the value of retirement savings for 6,800 pension scheme members. The government’s Pension Protection Fund would have to meet the estimated £540m bill. Renationalisation of Daw Mill may be a way forward – technically, this means returning Daw Mill to the Coal Authority, a DECC quango. The authority owns and licences, on behalf of the nation, the vast majority of the coal in Great Britain, as well as former coal mines. It’s a NDPB (non-departmental public body) sponsored by DECC.
UK Coal, with 2,000 employees, runs the two remaining deep mines and six surface mines. The transfer of Daw Mill should help secure both of the objectives of the three mining unions (NUM, BACM and NACODS), to secure 2,000 jobs and the pension entitlements of 650 Daw Mill miners. Before the fire, Daw Mill supplied 28% of the group’s output and about 5% of national energy needs.
We shouldn’t be too shy about the public route for coal. Poyry’s report for the government on the Outlook for new coal-fired power stations in Germany, The Netherlands and Spain (DECC, 2013) shows that the recent government-backed coal plant construction booms in Germany and The Netherlands may have come to an end. But it also reveals that in both Germany and Spain subsidies are paid to support and sustain coalmining industries – worth nearly 2bn euros a year in Germany in 2012.
The Energy Minister told Parliament on 10 May 2013 that his office was in daily contact with the company and regular contact with union representatives and MPs. “The government’s priority remains to assist the company’s efforts to ensure that as far as possible the viable parts of the business are maintained, and that those who are regrettably likely to be made redundant following the fire at Daw Mill receive appropriate support.”
Efforts to secure the immediate future of UK Coal are clearly vital. But the central issue remains of the role of coal in the UK energy mix. Coal, it seems, is the forgotten fuel in the energy debate, only making news when there is a crisis rather than opportunity to play its part in our energy future. Coal power still underpins the UK’s electricity supply system. It provides stable and flexible base load, a cost-effective counterbalance to intermittent renewable and inflexible nuclear power. Coal’s share of electricity generation increased from 28% to 30% between 2010 and 2011, as it substituted for gas generation. The challenge for government now is to secure a place for clean coal in its new contracts system in the Energy Bill, with carbon capture from plant using indigenous coal reserves.