1. IS THERE AN ENERGY CRISIS? David Brewer, BA., ACMA Director General Confederation of UK Coal Producers Presented to RICS Minerals and Waste Management Faculty's Annual Conference Hilton Hotel, York,19th March 2004

2. ENERGY WHITE PAPER OUR ENERGY FUTURE – CREATING A LOW CARBON ECONOMY FOUR POLICY GOALS Path to cut CO2 emissions by 60% by 2050 with real progress by 2020 Maintain reliability of energy supplies Promote competitive markets to raise rate of sustainable growth and improve productivity Ensure every home adequately and affordably heated

3. ENERGY WHITE PAPER OUR ENERGY FUTURE – CREATING A LOW CARBON ECONOMY Primary goal, as the title suggests, is to reduce CO 2 emissions Has this lead – or will it lead – to an energy crisis? Where have we come from, where are we now, and where might we be going to?

10. UK Oil & Gas Prices Source: International Petroleum Exchange

12. International Coal Prices

13. International Freight Rates

14. EFFECT OF ENVIRONMENTAL MEASURES ON COAL-FIRED GENERATION Large Combustion Plants Directive – limits SO 2, NO X and Dust Implementation by Emission Limits or National Plan. National Plan discriminates against high sulphur indigenous coal Non-FGD stations will start to close from 2008. EU Emissions Trading Directive – limits CO 2

15. EFFECT OF EUETS NATIONAL ALLOCATION PLAN Carbon allocations to coal stations will permit burn of about 38 mtpa for 2005 to 2008 BUT total NAP allocations not enough to keep the lights on unless new entrant reserve used May be further switch from coal to gas through carbon trading, or purchase of allowances from other sectors, or from Europe Depends on relative coal/gas prices and market price of carbon Electricity prices will increase – how much? Coal burn could fall further

16. EFFECT OF ENVIRONMENTAL MEASURES ON COAL-FIRED GENERATION Effect of EU Emissions Trading Scheme will be to disincentivise further investment Coal-fired power stations might close by 2016 because of Large Combustion Plants Directive NO X requirements But there will remain significant coal-fired capacity well beyond 2010

17. THE END OF NUCLEAR POWER? Magnox Stations close by 2011 AGR Stations close by 2020 Only Sizewell B (PWR) remains open after 2020

24. FUTURE ENERGY PRICES A double whammy The price of carbon - £8/MWh – twice the price of Germany Increased demand for gas means higher gas prices Carbon price and higher gas prices will BOTH increase electricity prices Both gas and electricity prices higher

25. IS THERE A MARKET FOR INDIGENOUS COAL? Depends on implementation of Large Combustion Plants Directive by ELV option Gas prices will be high Significant coal-fired generating capacity will remain until at least 2015 There will be a market well beyond 2010 International coal prices may stay high

26. CAN WE PRODUCE IT? A Forecast of UK Production to 2010 mtmt mtmt Englanddeep13 surface 316 Scotlandsurface 7 Walesdeep 1 surface 1 2 Total25

28. ENGLISH SURFACE MINE RESERVES Over 500 m tonnes of potential surface mine reserves Only 5.7 m tonnes of consented reserves remaining – less than 18 months A viable, profitable industry is being destroyed We are importing coal we could be producing – and exporting jobs We are exporting environmental impacts

29. GAS WON’T GET US THERE Gas is a carbon-rich fuel 20 – 30% renewables the maximum for electricity generation? Intermittent What about domestic and transport energy demand? Renewables and 70 – 80% gas for electricity won’t achieve a 60% carbon cut Are we going down the wrong route if the coal and nuclear options are lost?

30. IS THERE AN ALTERNATIVE? New nuclear? – Very expensive, but cheaper than some renewables Clean coal technology with carbon capture and sequestration? – Expensive but cheaper than nuclear and many renewables Capturing CO 2 produces hydrogen

31. THE HYDROGEN ECONOMY Mix of fuels for electricity generation – gas, renewables, nuclear and clean coal Carbon capture and sequestration from fossil fuels Hydrogen for transport Expensive but cheaper than relying on renewables and gas The cheapest way to a low carbon future?