2012 was a remarkable year for the British coal industry, with an almost 50% growth in coal power generation across the UK. Just in the first nine months of 2012 alone, coal consumption for power had already exceeded the entire amount used in 2011. However, many investors are expecting a far bleaker future for European coal production as a whole.
Choked by EU Regulation
In an attempt to improve air quality, the European Union has initiated the Large Plant Combustion Directive. This forces many plants to either convert to biomass or shut down completely. The first stage of this directive gives six major coal powered plants until the end of 2015 to make their decision. If this trend continues, industry insiders are predicting that Ratcliffe will be the only functional coal-fire power station remaining in the UK by the year 2022.
The companies that own the remaining plants have until the end of the year to decide whether or not they will make the large investment required to update their facilities to meet requirements set in place by the Industrial Emissions Directive. If they fail to do so, the only alternatives are to either convert to biofuel, or stop operations entirely. Several companies have already indicated they will either fully or partially convert to biofuel.
There is potential for the situation to get even uglier for the coal industry. An energy bill currently being introduced to parliament will essentially cripple coal power generation until carbon catching technologies become more commercially viable.
The bill will introduce a carbon floor price and provide subsidies for the development of low carbon methods of electrical generation. This will make the burning of coal a much less rewarding endeavor. With such large subsidies given for the research and development of low carbon techniques of generating electricity, many investors are skeptical of coal’s ability to remain profitable in the near future.
Facing regulatory woes and an ever-growing global sentiment that places a strong emphases on renewable energy, a few outcomes seem inevitable. The use of domestic coal for generating electricity in the UK will continue to decline, and the cost of coal will continue to plummet. This not only scares off investors, but also drives away talented individuals from ever considering a career in the coal industry. As green technology continues its rapid advance, it is hard to fathom how the burning of fossil fuels will remain a viable option for generating electricity a mere decade into the future.
The UK’s Economic Future Is at Stake
It’s important to understand that Britain’s history is filled with technological innovation that has been instrumental in revolutionizing energy markets around the world. In the early 20th century, the UK led the world by creating the first truly integrated national electricity grid. Now, in 2013, that same innovative spirit is driving legislators to take an aggressive, pro-active stance. The intent of such radical action is to ensure that the UK has an energy future that equals the greatness of its past. Failure to act now would be placing the UK’s economic future in the hands of its top competitors.