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Death of a king

Neil Eisberg, 18 May 2017

Economic energy is a key factor in the success of the chemical industry, not just in the UK but around the world, whether it is derived from coal, natural gas or alternative to fossil fuels, like biomass, solar, wind or nuclear energy.

Certainly ‘King Coal’ has played a major role in energy generation in the UK since the Industrial Revolution, with the first coal-fired power station reportedly being switched on in 1882. Gas and nuclear power, however, have increasingly joined coal as the key contributors in meeting energy demand, with wind and solar entering the picture in recent years.

On 21 April 2017, however, the UK experienced its first ever working day without coal generation since the Industrial Revolution, according to the National Grid. The previous record was a period of 19 hours in May 2016, but this was over a weekend when electricity demand is generally much lower.

Observers have commented that at this time of the year, coal-fired power stations can be turned off since operating natural gas power stations offer sufficient reserve capacity to provide flexibility to cope with demand particularly in view of the variability in generation by renewable supplies such as wind and solar.

As David Elmes , a professor at Warwick Business School, UK, who is also head of the WBS Global Energy Research Network, noted: ‘This is an exciting step in the huge transition the UK is making to the electricity system that’s still affordable and reliable but more sustainable through using gas rather than coal.’

However, he also noted that ‘there still challenges and opportunities ahead. Using less coal is not just about changing the fuel used in power stations, it’s a shift in the way we generate, store and use energy from big centralised solutions like large power stations and the national network of pylons and cables we use to move electricity around. We already see a move to more local, distributed ways that energy is made and used, in our homes communities and industry’.

But can coal be totally replaced?

Michael Bradshaw, professor of global energy at Warwick Business School and co-author of a report for UKERC : The future role of natural gas in the UK, points out that the UK government is currently involved in a consultation about its intention to remove coal completely by 2025. ‘But it seems it may well be gone before then.,’ he adds. ‘However, this begs the question; what will replace that coal in the power generation mix? The government talks of the need for “new” gas power generation and is concerned that the current capacity mechanism is not incentivising sufficient investment.’

The question of investment has also been thrown into confusion by the recently announced proposed energy price cap, which a future Conservative government says it will institute if it wins the June 2017 general election. Industry sources have already warned that such a move would potentially result in a reduction in investment.

And would natural gas be the long-term answer as a coal replacement anyway?

As Bradshaw points out: ‘There is considerable uncertainty over the future role of gas in UK power generation. In 2015, power generation accounted for 22.2% of UK gas demand; the household sector, 30.2%; and industry, 20.2%.’

Bradshaw points out that when burned to generate electricity, natural gas produces about half the amount of carbon dioxide that would be emitted from coal. ‘However, the future trajectory of the UK’s energy mix is constrained by the Climate Change Act (2008) and its commitment to reduce carbon dioxide emissions by 80% over 1990 levels by 2050. This requires the almost total decarbonisation of the energy system. With coal gone from the power generation mix by 2025 at the latest, gas becomes the high-carbon fuel in the mix.’

Bradshaw believes there are two possible paths if gas is to remain in the energy mix. Firstly, the use of carbon capture and storage (CCS) could significantly reduce emissions, however, the UK government cancelled its support for CCS in November 2015, for ‘purely fiscal reasons’, although he hope such support will form part of the new Industrial Strategy. The second approach would be to ‘decarbonise’ natural gas itself, by using methane to produce hydrogen , however, this approach would also require CCS, while he believes the use of biogas and biomethane are ‘unlikely to provide a large-scale solution’.

And what about renewables, like wind and solar? The arguments for and against each of these are well-known, and include questions like: why is it not included in building regulations that every new build should include solar arrays? This would support Elmes’ views on the de-centralisation of power generation but will power utilities surrender their tight grip on control of the energy markets with consumers going-it alone?

This of course leaves nuclear power, and once again the pros and cons are well-known, with successive UK governments failing to grasp the decision-making nettle . Although the UK government has tried to demonstrate support for a resurgence in this route, the path has been tortuous and could be even more so with recent concerns about the future of at least one UK project, the more than £15bn Cumbrian NuGen project at Moorside, as a result of financial problems at the supplier, Japan’s Toshiba.

So how is this likely to move forward? The UK has lacked a formal energy policy, despite repeated calls, especially from industry. In the chemical sector, some companies like Ineos have taken it upon themselves to seek solutions to meet their energy needs, by importing shale gas from the US and acquiring North Sea assets. For smaller chemical companies, however, all they can do is seek the best possible competitive prices for their energy, and hope that Brexit does not result in problems in gas supplies through the North Sea Interconnector.

Energy is the lifeblood of the chemical industry but getting that recognised appears to be a major up-hill struggle.

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