Could wind and solar farms be a thing of the past? With the UK sitting on huge shale gas deposits and a history in coal mining could the promise of new cheap energy be the stimulus the economy so desperately needs?
Current predictions for the future of European energy suggest that it will rely on a mixture of new generation clean-coal plants and alternative energy sources. Already the International Energy Agency and Russia’s Ministry of Energy held a workshop on Energy Efficiency and Clean Coal Technologies. Similarly, Germany’s RWE established its Coal Innovation Centre and together with Russia’s Gazprom have announced a partnership to construct new gas and coal plants in Europe. The recent OECD report forecasts that by 2050, the OECD and BRIC countries will rely on renewable electricity for half its power needs, the other half will consist of nuclear and fossil fuel plants with carbon capture and storage (CCS) technology.
The term clean coal means the carbon emissions would be captured and stored underground. Though this technology has been ‘demonstrated’, its reliability has not been proven, which raises the question does anyone know what actually happens to the trapped emissions underground and the potential risks involved? Many coal plants with the CCS system are also less efficient and cost more to operate, hence the commercial viability is questionable. Mr. Brinkman from McKinsey’s said to FT, ‘It’s the capture that requires the biggest breakthrough for the cost to come down.’
The case of the largest carbon capture from the natural gas streams is ExxonMobil at Shute Creek in Wyoming; it demonstrates that the only cost effective way to run these plants is to sell the CO2: ‘the captured carbon dioxide is sold to companies for enhanced oil recovery, helping to extend the productive lives of mature oil fields and producing more energy supplies’. The largest coal-fired carbon capture facility- KM CDR Process® capture technology- was jointly developed by Mitsubishi Heavy Industries and The Kansai Electric Power. It claims to use significantly less energy compared with other CO2 capture technologies. However, in contrast to ExxonMobil, Mitsubishi does not sell its CO2- instead, it is ‘permanently stored underground in a deep saline geologic formation’. The question remains, whether Mitsubishi’s capture technology is sustainable both commercially and without risk to the environment. Its’ 2011 press publication on announcing this technology does not mention anything about the commercial viability of these plants; though back in 2009 its’report mentioned that the next step for coal fired boilers was to ‘operate the process at a scale large enough to ensure trouble- free operation at commercial scale’. Nevertheless, while CCS technologies used in natural gas plants look straightforward, the case for CCS in coal plants seems to be more complicated.
Eight of the UK’s coal plants are due to shut by 2015 to meet the EU’s Large Combustion Plant Directive, which has led to an temporary increased output of 75% capacity compared with the usual 25% just a year ago. Under the EU’s carbon trading scheme carbon prices fell more than 50 per cent in 2011. Due to the lower demand for coal since the Eurozone crisis, the price of burning it has come down. ‘Coal has become the preferred source of electricity generation in recent months’, according to Sylvia Pfeifer, energy editor at the FT.
There are also flaws in the EU emission trading system. The EU emissions trading scheme was expected to discourage coal-fired power generation responsible for greenhouse gas emissions. Instead, carbon permits and the impact of the Eurozone crisis have made emissions trading useless. ‘Companies can emit more than their allocation by buying allowances from the market and if they emit less, they can sell the surplus’, wrote the FT.
Regulation of shale gas in the UK seems to be left too much to the industry itself rather than being regulated proactively, as discussed Newsnight 20/03/12. The main worry is for two years health and safety officers have not been to inspect the concentration of chemicals in the water used for the extraction process. According to Nick Grealy, energy consultant, the extraction of shale gas in the UK would halve energy prices. However Caroline Lucas the Green Party’s only MP said that the UK is too densely populated for shale gas to lower the price of gas significantly. It is assumed that shale fracking may have triggered small earthquakes in Blackpool and Lancashire, however currently there is no clear evidence that fracking causes earthquakes or that it pollutes drinking water. There is some evidence that fracking induces minor quakes, but according to a Geo- mechanical study, the tremors in Blackpool and Lancashire were caused by an ‘unusual combination of factors’ and the conditions that caused the tremors are ‘unlikely to occur again’. The main regulator of shale gas drilling in the UK, Cuadrilla, promises to ensure the safety of operations through early seismic detection systems. One thing is clear- shale gas would ensure energy security and boost the UK economy for many years to come, but the side effects are controversial.
France and Bulgaria have banned shale gas drilling. The state owned energy companies Bulgarian Energy Holding and Bulgargaz said that ‘shale gas production does not pose greater environmental risks than the production of conventional energy and mineral resources’. The main opposition to shale gas drilling comes from the socialist party MP Antoni Kutev, who argues that shale gas will be unprofitable from a technological point of view and will cause damage to the environment. That said, according to the Polish Geological Institute study shale gas has been found to cause no environmental harm. The study found that ‘soil, air and water are all just fine if drilling is done according to regulations’.
The claims of shale gas being unprofitable is ungrounded as the situation in America shows; i.e. the shale gas boom in America has driven domestic natural gas prices so low that coal fired plants became uneconomical. According to energy expert Hristo Kazandzhiev, in Bulgaria the price of gas would decline by 8 to 25% due to the adoption of shale gas technology. He also believes that due to rival interest in Russian natural gas Gazprom has published documents against shale gas drilling.
Whatever the arguments for cheap clean fossil fuels, governments are notoriously bad at predicting winning technologies and industries. The recent rhetoric from Westminster has changed over the last few years from cutting emissions to energy security and calling for an energy mix. With the closure of many power stations in the coming decade it would be hard to believe that these shale gas and coal reserves sitting literally under our feet would go untapped. Green technologies are proving expensive but all sources of energy will prove welcome if they diminish the prospect of the lights going out.