Patrick Carragher

Coal Supplies and Clean Coal Technology

Global Coal Demand (Thermal)

Billion Tonnes

• 1980 3.0

• 2002 4.8

• 2030 (est) 6-7

UK Coal Production (Underground)

Million Tonnes

• 1955 211

• 1983 105

• 1993 43

• 2005 10

UK Coal Production (Opencast)

Million Tonnes

• 1983 14

• 1990 15.7

• 1996 16.6

• 2003 13.1

• 2005 10.2

• Decline due to presumption against

Global Trade

• Most coal production consumed locally• International coal traded in 2003 - 720 mt• Two main trading areas: Asia and Europe• Two trading types: thermal and coking• Main suppliers to international market:• Australia• Indonesia• South Africa

• Russia/Poland

• Columbia/Venezuela

Principal Suppliers to Europe

• Russia

• Australia

• Poland

• South Africa

• Incremental production in Columbia will be taken by USA

• Incremental production in Indonesia (and some extent Australia) will be taken by China/Pacific Rim

UK Market

2001 2002 2003 2004 2005

Electricity Generation 50.9 47.7 52.5 50.5 52.2

Domestic 2.9 2.2 1.6 1.7 1.3

Industry 1.5 2.2 1.6 2.1 2.0

Coking 7.9 6.5 6.6 6.4 6.6

Total 64.2 58.7 62.3 60.7 62.1

UK steam imports since 1999: mt

0

5

10

15

20

25

30

35

40

45

1999 2000 2001 2002 2003 2004 2005 2006e

Imports by supplier (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 H1 06

Others

US

S. Africa

Russia

Poland

Indonesia

Colombia

Australia

Can deep-mined coal compete?

• Costs = £1.41/GJ now, have been as low as the £1.20s and as high as the £1.50s

• Delivered prices are £1.80-ish and UKC’s received price is £1.39/GJ

• Quality is poor compared to imports (Sulphur)• A $2.00 Pound, or an import price collapse will spell

trouble for the UK production• Would the generators stay with the indigenous for

security?

Is there room at the ports?

Mainly handling sized<0.5Ellesmere Port

Certainly more if needed41-44Total

Aberthaw, Didcot and Rugeley6.5Bristol/Avonmouth

Aberthaw, Uskmouth or Midlands<1.0Newport

Aberthaw or Didcot1.0Port Talbot

Only Fiddlers and Rugeley3.5Liverpool

Serving Longannet, Kilroot & England6.0Hunterston

Serving Cockenzie and Longannet1.0Forth (Rosyth)

Best for Alcan, Aire Valley interest1.5Tyne/Blyth

Serving Aire Valley, down from 1.5mt1.0Tees

Serving Aire Valley, could expand2.0Hull

Serving Aire and Trent Valleys12-15Immingham

Only serving Kingsnorth and Tilbury>5.0Thamesside (power stations)

Comments/stationsmt/yrPort

0

5

10

15

20

25

30

35

40

45

1999 2000 2001 2002 2003 2004 2005 2006e

Imports Output

Imports vs UK output: mt

Imports: Conclusions

• International market likely to remain tight

• Russia to remain main UK supplier provided high price

• No guarantee for indigenous UK coal production

• But indigenous important bulwark against international supplied/price volatility

• Opencast particularly vulnerable

Clean Coal

• Existing fleet 40 years old

• Pulverised fuel (pf technology)

• Environmental concerns of 1980s early 1990s acid rain

• Hence Large Ccombustion Plant Directive

Late ‘90s Environmental Focus on Carbon

• EU Emissions Trading Scheme

• National allocation plan

• Current fleet 29 GW (opted in) 20.5 GW

• Opted in plant can run to 2016 possibly 2020

• Opted out plant must close by 2015

New Technologies

• IGCC and Advanced Supercritical (ASC)

• Increase thermal efficiency

• Prospect of further development

Clean Coal Task Group

• Reported in June and recommended retention of current generating capacity with new Clean Coal Technologies

• However, Government assistance necessary on number of levels

• Price of carbon critical

• Market certainty for investment critical

Current Projects

IGCC and ASC

• Power Fuel Hatfield - 800 MW• Killingholme E.ON - 1000 MW• Progressive Energy - Teeside (EOR?) -

800MW• Progressive Energy - Valleys Project 450 MW

Supercritical

• RWE Tilbury - 1000 MW

• E.ON Kings North - 2X800 MW

• Scottish and Southern - Ferrybridge - 500 MW

Carbon Capture and Storage

• All the above projects are CCS adaptable

• Peterhead (gas) EOR project

• Infrastructure essential for CCS

• New financial instruments

Conclusions

• Much progress made

• More to be done

• Government and EU support essential