In the nineteenth century, Europe’s bubbling coal smokestacks were viewed as a sign of progress.
Today, conscious of the polluting effects of emissions, Europe is imposing strict regulations on the use of coal as an energy source.
Concerns are being raised on how these regulations, and the European Union’s (EU’s) large combustion plant directive (LCPD), in particular, will affect South Africa’s coal exports to Europe.
The LCPD aims to reduce acidification, ground-level ozone and particulates by controlling the emissions of sulphur dioxide, nitrogen oxides (NOx) and dust from large combustion plant, such as coal-fired power stations.
The directive sets emission limits for all new coal-fired plant of 50 MW and larger, as well as new limits for existing power-generation plant, which will be binding from January 1, 2008.
The EU is the largest export destination for South African coal.
In 2006, exports to the EU accounted for 88%, or about 60-million tons, of South Africa’s coal exports.
The UK is the single largest importer of South African coal.
According to research company McCloskey’s, the UK bought 11,2-million tons of South African coal in 2006.
South Africa National Energy Research Institute (Saneri) clean coal technology chair Professor Rosemary Falcon tells Mining Weekly that South African coal has traditionally been in strong demand in Europe, owing to its low sulphur content.
However, in traditional boilers, the combustion of South Africa’s coal results in higher NOx emissions than coals mined in, for instance, Colombia and Indonesia.
NOx emissions form when fuels are burned at high temperatures. The two main sources of NOx emissions are transportation vehicles and stationary combustion sources such as electricity utility boilers and industrial boilers.
The LCPD focuses on reducing NOx emissions from coal-fired boilers.
Falcon says that, in many instances, the usual burning of South African coal and coals sourced elsewhere in the southern hemisphere is not compatible with the NOx emission-reduction targets prescribed by the LCPD under normal circumstances.
“To use such coal, power stations in the EU will need to upgrade to new low-NOx burners.
“Another solution is that these power stations could reduce the temperature of the combustion process to limit the production of NOx.
“On the other hand, a reduction in temperature will affect the efficiency of the plant to combust the coals properly,” Falcon tells Mining Weekly.
She emphasises that the quality of coal delivered by South African producers to their EU customers has not changed and is as consistent as it has always been.
Earlier this year, a Reuters report suggested that the UK’s largest coal-fired power station, Drax, would replace South African and Russian coal with that from Indonesia, Colombia and the US.
However, Andrew Jones, a spokesperson for Drax, which, in 2006, bought 800 000 t of coal from South Africa, tells Mining Weekly in a telephonic interview that the issue is “not as black and white as painted by the Reuters report”.
Jones says that the company has a strong global supplier base, and that its procurement policies do not preclude it from buying South African coal in future.
“In principle, we have not stopped buying South African coal, but, given the requirements of the LCPD, we are taking into account the reduction of emissions in addition to the price and quality of coal when deciding on a purchase,” Jones says.
Under the LCPD, Drax is required to reduce NOx emissions by 30% from January 1, 2008.
To achieve this target, the company is looking at different options, such as the blending of different coals, and the burning of biomass.
Drax has also made a substantial investment in boosted- over-fire-air (Bofa) technology, Bofa being an emissions- reducing technology that specifically tackles NOx.
On the potential impact of the LCPD on South African exports, UK Coal Authority chairperson John Harris tells Mining Weekly that the growth or decline of South African coal exports to the UK, in particular, and the EU, in general, could be tied as much to the performance of the Russian coal export industry as it is to climate-change issues.
Although Russia is the largest single source of coal to the UK by country of origin, supplying 22,2-million tons to the country in 2006, commentators expect this level to decline sharply as the Russian government apparently wants to see more coal and less gas used in Russia.
Gas is being pushed as the preferred, higher- value export.
Moreover, rail freight rates are set to rise from January 2008, which will make Russian coal more expensive and less competitive.
“If Russian coal supplies do fall away, as some predict, South African coal will become attractive again,” says Harris, who has been the chairperson of the UK Coal Authority since 1999.
He confirms the “significant” swing of UK and EU energy policy, however, towards security of supply and climate change issues, which have become top political priorities.
Simultaneously, EU interest is being revived in coal as the most abundant conventional energy source, the European Commission’s directorate general for energy and transport disclosing that reserves of hard coal are equivalent to nearly 200 years of production and reserves of lignite equivalent to some 130 years of production at the current levels.
Resources, especially those for hard coal, are significantly greater than for other conventional energy sources.
The use of coal to supply the UK’s future energy requirements is also recognised in the UK’s recently published energy white paper.
Roughly, a third of the UK’s power is generated from coal, more than a third from gas and just under a third from nuclear and renewables, a ratio which Harris expects to persist.
“It has been recognised that coal is remarkably flexible in delivering the peak-time demands for electricity. In the three midwinter months of 2006, coal provided more than 50% of the UK’s power,” he reports.
To maintain its current coal-fired generation capacity, the UK will have to build a number of new power stations in the next ten years as older stations are phased out.
Other European countries have similar plans to replace, and even expand, coal-fired power generation facilities, Harris says.
Cleaning up coal
Harris emphasises that there is a growing awareness and acceptance in the EU of the importance of reducing and limiting the harmful emissions associated with coal-fired power generation.
To this end, the EU is investigating clean- coal technologies and proposing to launch ten carbon-capture and storage demonstration plants by 2015.
The EU is also mooting that all new coal-fired power plant be built with carbon-capture and storage facilities from 2020.
Harris makes the point that the drive to make clean coal a sustainable source of energy in the EU could strengthen the South African coal export market, as it will advance emission solutions that will make the country’s coal more acceptable.
For instance, clean-coal technologies or carbon-capture and storage options could negate the challenges posed by NOx emissions.
Saneri’s Dr Tony Surridge says the South African coal industry is part of the worldwide initiative to clean up coal.
South Africa is investigating and undertaking projects in areas such as supercritical boiler technology, underground gasification and the beneficiation of coal to produce a cleaner end product.
South Africa produces about 312-million tons a year of run-of-mine (Rom) coal.
Rom coal is beneficiated by washing and screening to produce 68-million tons of product for the export market, 108-million million tons for electricity utility Eskom, 44-million tons for Sasol’s coal-to- liquids projects and 16-million tons for the metallurgy and other markets.
Losing EU ‘unthinkable’
South Africa is investing billions of rands to establish new and brownfield coal-mining operations and to upgrade rail and port export infrastructure.
These investments will enable the country to export 91-million tons a year of coal by 2010.
Department of Minerals and Energy chief mineral economist Xavier Prevost says that South Africa will be hard-pressed to develop an alternative export market to compete with the country’s exports to the EU.
“Losing the EU as an export market would be unthinkable, as it accounts for the bulk of South Africa’s exports.
“Sustaining and growing the local coal-mining industry really depend on these exports,” Prevost adds.
Solid export prices for exported coal earn valuable foreign currency for South Africa.
Moreover, achieving solid revenue from sales abroad assists South Africa’s coal-miners to supply some of the cheapest coal in the world to local electricity utility Eskom.
This, in turn, underpins Eskom’s ability to generate the world’s cheapest electricity, which powers the South African economy.
Prevost doubts whether low-NOx emission coal producers, such as Colombia and Indonesia, would be able to fill South Africa’s shoes in supplying the EU with coal, as it would require massive investments to develop these countries’ coal resources to match the volume and overall quality of South African exports.
“I cannot see any country [taking over] South Africa’s position in supplying coal to the EU. Well, not for the time being, anyway,” Prevost concludes.