The end of coal?

This post started out as four related items in Climate clippings. When a fifth showed up I decided to extract them and put them in a separate post. Hence it is a collection of opinions and perspectives rather than an analysis of the future of coal as such. Still, a message seems to emerge.

BHP calls for carbon pricing

Believe it or not Andrew Mackenzie, CEO of BHP Billiton, has called for a price to be put on greenhouse gas emissions to address the threat of global warming.

Talking in Houston Texas on the future of fossil fuels and carbon emissions Andrew Mackenzie said BHP needs to think carefully about controlling its carbon emissions. He wants BHP to lead the way. BHP is the world’s largest mining company and the third biggest company in the world.

Beyond coal the company is also a major player in shale gas in the USA, investing a cool $US20 billion in 2012.

Mackenzie was on message about ‘clean coal’, spruiking the virtues of carbon capture and storage (CCS).

Rio weighs in

Rio Tinto’s head of energy, Harry Kenyon-Slaney, also weighed in saying “Idealistic discussions” about climate change should be abandoned and Australians should recognise that coal will remain an important energy source for decades.

Coal will continue to “do the lion’s share of heavy lifting” to meet energy demand, he says.

Rio has invested $100 million in carbon capture and storage.

Martin Ferguson, now an adviser to the Australian Petroleum Production & Exploration Association:

stepped up criticism of the Coalition government’s emissions-reductions policies and called for the watering down of the renewable energy target, which he said was undermining the national electricity market.

Tristan Edis comments

Tristan Edis comments on Rio Tinto’s clean coal idealism.

He reckons CCS would be great if you could also retrofit it to existing coal-fired power stations, implement it at large scale and a reasonable cost and start doing it by, say, 2025.

The Australian Coal Association instituted an industry-funded initiative to progress zero-emission coal with a levy and created ACA Low Emissions Technology Ltd (ACALET) to undertake initiatives. Unfortunately from 2012-13 the requirement to pay the levy was suspended and ACALET is now concentrating on promoting the use of coal in Australia and overseas.

Edis reports that Industry Minister Ian Macfarlane seems to be willing to acknowledge that carbon capture and storage is a pipedream.

One senior Liberal referred to it as ‘vaporware’ (new computer software promised by companies to be delivered in the future that never eventuates but scares off competing software development).

The end of coal?

Paul Gilding has called the end of coal and the dawn of renewables, especially solar.

He believes the fossil fuel industry live in a delusionary analytical bubble, convinced of their own immortality. They are about to be swept away. Markets can be brutal.

The top 20 European utilities have lost $600 billion in value over the past 5 years.

Tesla, presumably because it makes electric vehicles (see also below), is now worth more than half GM although GM makes 300 times as many cars.

HSBC’s Global Solar index rose 65% last year and is already up 23% in 2014.

Underground coal gasification

Trials are underway or planned in diverse parts of the world in burning in situ coal that can’t be mined, according to an article by Fred Pearce in the New Scientist (paywalled). The process is underground coal gasification (UCG).

The potential is enormous, with enough coal available to supply the world with energy for 1000 years. For example, 70% of the coal in the UK has never been mined. One company has a licence to prospect for UCG sites beneath more than 400 square kilometres of the North Sea.

The attraction of UCG is not just power production. The process produces methane, carbon monoxide, hydrogen as well as CO2. The Brits see potential to use these chemicals as feedstock to revitalize their industrial chemicals industry. The article lists the following uses:

  • Gas to electricity Power stations can burn methane to produce electricity for the grid
  • Gas to chemicals Hydrogen, methane and CO all have value as feedstock for the chemicals industry
  • Gas to liquid Methane can be liquefied (LNG) for storage or transport, or the CO and hydrogen converted through the Fischer-Tropsch process to synthetic diesel fuel for vehicles
  • Gas to tech Hydrogen can provide an alternative transport fuel

CO2 can be reinjected into the void created by the burnt coal.

The article refers to a 2007 MIT study which found that commercial CCS was unlikely before 2030. Undaunted Myles Allen, an Oxford University climate scientist, reckons that CCS is the “only practical way forward”.

Christiana Figueres is hopeful

Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), points to 60 countries with 500 pieces of climate legislation, and is confident that an international climate change agreement will be delivered on time in 2015. She looks forward within 20 years to the time where everything new we do will be carbon neutral.

She does see a need for research into energy storage – batteries – and into CCS.

It is only with marketable CCS that we will be able to use the fossil fuels that we need. Storage and CCS would be my top two choices for technology investment.

If so someone, for example BHP and Rio, get cracking.



Investment bank Morgan Stanley says it has been overwhelmed by the response to its recent analysis which suggested that the falling costs of both solar modules and battery storage presented a potential tipping point that would encourage huge numbers of homeowners and businesses in the US to go off grid.

And Tesla is building a $5 billion ‘gigafactory’ for battery production, then providing an

emergency power service by monitoring the power levels in home batteries and delivering replacement batteries in the event home batteries run out of power.

Someone should tell Andrew Mackenzie and Harry Kenyon-Slaney they’ll need to shake a leg with CCS. Schumpeter’s creative destruction seems to be at work in the energy industry.

Update: Murray Energy, the largest independent coal producer in the US, is suing the EPA for not taking into account job losses when formulating emissions regulations.

8 thoughts on “The end of coal?”

  1. A few random thoughts:
    Burning coal in situ: (1) How can you control the burning once it gets going? (2) Okay, so you turn solid coal into gas then extract it – what happens when the resultant huge uneven chambers (not neat drives) thus created start collapsing all over the place? “Funny, I’m sure that suburb was around here somewhere yesterday”.

    Solar: Seems like an unlimited future – but not if household are compelled to sell their electricity to power companies and have the operation of their own household system controlled by those same monopolistic power companies …. and certainly not if genuinely independent off-grid household systems are forbidden by regulation or made so artificially expensive that they are beyond the reach of mere mortals

  2. Graham, I imagine that if you had a mineable seam you’d mine it in the conventional way. So it may not be a big hole as such. But I understand subsidence has been a problem in long wall mining. It’s a good question, though.

  3. Graham/Brian: LINC Energy ran a demonstration plant at Chinchilla for a number of years. My recollection is that there were problems with benzene and other carcinogens getting into the water supply (but I may have the wrong company.)
    The process consists of burning coal underground in the presence of water to generate coal gas (which contains a number of nasties), carbon monoxide and hydrogen. If air (instead of pure oxygen) is used to burn the coal the mix will contain nitrogen.
    The process generates more CO2 per unit of useable energy compared with coal because coal has to be burned to generate the heat required for the gasification.
    The process will leave open chambers behind that will collapse. These collapses can lead to fractures forming that may let nasties into water tables. (Keep in mind that long wall mining can also lead to subsidence and cracking.) To be fair, the real attraction of underground gasification is that it allows useful products to be exracted from deep seams that would be difficult to mine.
    Conclusion: Makes CSG look benign.

  4. My take on CSS is that, like nuclear, it is being used as an excuse to put off doing something about reducing power generation emissions. For this application it is most unlikely to be competitive. The CO2 has got to be extracted from flue gases and then piped to a disposal location. Finding and proving places where the CO2 can be stored underground is not going to cost nothing either. Most power stations will be some way away from a suitable storage place,
    If the coal industry really thought CSS was the answer they would be putting money into it.

  5. John D @ 3, from the paywalled article linked in the post, Chinchilla ran smoothly for 10 years. The problems were near Kingaroy:

    Following groundwater contamination with benzene during UCG trials in the US, the Queensland state regulators wanted to be sure that underground fires wouldn’t create similar problems that surface later. In 2011 the Queensland authorities shut down Cougar’s operations at Kingaroy after benzene and toluene seeped into a nearby water borehole. And last July, a state-sponsored scientific review vetoed commercial operations by Linc and Carbon Energy until the companies could demonstrate safe decommissioning, by extinguishing the fires, shutting off reactions and preventing groundwater contamination.

    In short, companies had to light the fire, put it out, demonstrate there was no groundwater contamination and then light the fire again to go into production mode. The companies reacted by closing down in Qld and going offshore.

    I think Chinchilla was Linc, Kingaroy was Cougar Energy and there was also Carbon Energy, all set up by the same people or combinations thereof. All gone.

  6. John D @ 4, one of the factors not always realised is that CO2 is over three times the mass of coal. Carbon has an atomic weight of 12, and each oxygen atom is 16. There is some other muck in coal so the usual conversion rate is three and a bit times, I believe.

    Site location and transportation is therefore crucial. The vision splendid is to have the power station near the burning pit and then transport the power.

  7. Criminal charges have been laid against LINC energy underground gasification operation

    Last week the Queensland Government filed four criminal charges of irreversible or “high impact” harm relating to the plant against resources company Linc Energy.

    It emerged the state’s environment department began investigating suspected environmental breaches nine months ago, but landholders told the ABC that the first they had heard of it was last Friday.

    Linc Energy faces four charges of “wilfully and unlawfully” causing serious harm, with the company facing fines of more than $2 million for each offence.

    The company rejected the charges as “misguided”.

    The ABC understands one of the charges related to a so-called overburden fracture, a crack in the layers of rock and soil that sit above the coal seam.

    In some cases this can lead to the escape of gases into the air or allow groundwater into the cavity……

  8. Yes, John , it seems to indicate that Linc’s operation at Chinchilla had not been closed, as stated in the New Scientist article.

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