What About Coal?

In any future energy market characterised by carbon prices, innovation and a competitive playing field, coal is a loser. This explains why the coal industry fights energy market reform and carbon taxes with such ferocity.

In an energy marketplace dominated by cheaper, cleaner renewables, $100 billion of existing coal industry assets has highly questionable value. Maintaining that value is the coal industry’s sole concern. But should it be society’s? Since the Industrial Revolution, the coal industry has shifted hundreds of billions of dollars in climate liabilities to the public sector. Should it be given another half-century sinecure to continue 'business as usual?' Economics argues no.

In addition to safeguarding its balance sheet, the coal industry has another reason to love carbon capture and storage. Carbon capture and storage coal-fired power plants consume 25-35% more coal to get the same electricity output as non-carbon capture plants. For the coal industry, what could be better? For society, what could be worse? Carbon capture and storage means more greenhouse gases emitted at the coal face. Carbon capture means more greenhouse gases emitted in transit. That's a perverse outcome.


Carbon capture and storage won't even be ready until 2015, if then		Carbon capture and storage consumes more coal than a normal coal power station
Source: "Coal 21 National Action Plan" Coal 21		Source: "Special Report Carbon Dioxide Capture and Storage," Intergovernmental Panel on Climate Change, 2005

The coal industry’s climate change action plan is known as "Coal 21." It suggests that by 2015 the industry might be ready for a carbon capture and storage technology roll out. That’s practically 10 years from now if the timetable is met, and there's no assurance it will. For instance, America’s US$1 billion Futuregen carbon capture project was supposed to be operational in 2009. That date was later pushed back to 2013. It's now been cancelled. And Futuregen was just a test plant.

Most carbon capture and storage projects are lagging badly on the optimistic projections given for their deployment

Source: Coal21

Even if carbon capture and storage were credibly on schedule and potentially cost competitive, there’s a third problem with it. Australia’s major coal-fired power centres like the Upper Spencer Gulf and New South Wales’ Hunter Valley are unsuited to carbon capture and storage. These two regions account for 40% of the nation’s coal-fired power. Carbon capture plants in those two locations could capture CO2, but they couldn’t store it. As a result, Huge pipelines would have to be built to ship the carbon to geologic storage sites in Victoria or the Bass Strait. But that would add as much as 25% to the already-high cost of carbon capture. The diseconomies multiply.


Dark areas represent carbon sinks of which few exist in eastern Australia outside Victoria	Shipping CO2 from Queensland, NSW or South Australia to Victoria would be prohibitively expensive
Source: "Special Report Carbon Dioxide Capture and Storage," Intergovernmental Panel on Climate Change, 2005	Source: "Special Report Carbon Dioxide Capture and Storage," Intergovernmental Panel on Climate Change, 2005

The costs of shipping carbon to sinks in Victoria from either the
Hunter Valley of New South Wales or the Upper Spencer Gulf of
South Australia will be prohibitive

This problem is already looming in Western Australia. There, efforts to build a so-called clean coal plant near Perth look to be foundering on the absence of suitable carbon storage sites. One possibility, of course, is to sequester the carbon around Moomba, for which electricity, hydrogen and natural gas power line and pipeline infrastructure could then be exploited to backhaul carbon from clean coal plants in Victoria and New South Wales if carbon capture proves safe and economic.

Moomba could become carbon storage hub

Source: Santos

Another problem haunts carbon capture and storage: where will the plants be located? There's near universal agreement among experts that carbon capture and storage is best suited to new coal-fired capacity, and retrofitting it to existing capacity is uneconomic. Should old coal-fired power plants be torn down and new ones put up in their place? That would create a several-year capacity gap as old coal-fired capacity is taken offline and torn down and new capacity built in its place at a time when Australia's annual energy needs are rising. Given this, a carbon capture and storage rollout based upon replacing existing coal-fired capacity on a brownfield basis could actually worsen Australia's electricity shortage in the short- to medium term. Conversely, if new carbon capture and storage plants are built on greenfield sites, that will create negative environmental effects through doubling the deleterious land footprint of coal-fired power plants in Australia. It would also require costly new investment in power line infrastructure to serve the new plants. And if the Australian government is going to subsidise this cost of hookup of new coal-fired capacity, why shouldn't it do the same for cleaner, cheaper, more rapidly-available solar and geothermal capacity in the Outback.

Elsewhere in the world, the compelling negative economics of coal-fired are leading to cancellations of planned new capacity. In late January, the United States announced it would not be funding the largest clean coal effort of them all, Futuregen. Given this, the whole future of CSS looks to be in something of a state of limbo.