Switch on to power targets

The Confederation of UK Coal Producers’ argument this week that cheaper coal generation should be used in preference to gas is simplistic. While it would slow up what looks like the inevitable demise of the coal industry in this country, the environmental arguments now have more influence in the Government’s reckonings. If coal were favoured, […]

The Confederation of UK Coal Producers’ argument this week that cheaper coal generation should be used in preference to gas is simplistic.

While it would slow up what looks like the inevitable demise of the coal industry in this country, the environmental arguments now have more influence in the Government’s reckonings. If coal were favoured, then individual power stations would soon exceed their emission limits and national targets would be missed.

That is not to say that there is no room for some substitution of coal-fired for gas-fired electricity generation before that point is reached. But emission targets are likely to tighten rather than remain static, so some margin would need to be preserved.

The news for the coal industry is grim. If the Government persists in its goal of a 20% reduction of CO2 by 2010, then the coal industry will disappear.

In the longer term, dependency on gas for energy generation may not be such a safe bet. If current trends continue, the UK will generate more than 50% of its electricity from gas by the end of 2010 which can only lead to dependence on sources as politically unstable as the CIS and Algeria. With that would come all the risks of a return to the price shocks that hit oil in the 1970s.

But there are few alternatives. Nuclear energy is a short-term fix, and is unlikely to move beyond its current share of about 25% of the generating market. Nor will renewable energy fill the gap.

There is no easy answer. But there is a strong case for strategic intervention by the Government to ensure that the nation has an affordable long-term source of electricity.