By Algy Cluff
The United Kingdom’s tough carbon tax regime will result in our remaining onshore coal mines closing within three or four years, due to lack of demand from our rapidly diminishing fleet of coal-fired power stations. There is a small section of our community that will rejoice in this fact but the majority will quite rightly wonder what removing more than 40 per cent of the UK’s electricity generating capacity does to its ability to ensure a reliable supply for homes and business.
And it’s even worse in Scotland. When Longannet closes in March 2016 it will take with it the capacity to generate more than three quarters of the electricity required by Scotland, regardless of weather.
What are we doing about this? Very little. The Coalition Government encouraged the renewables industry, but always through subsidies that punished the taxpayer. Incredibly, offshore wind farms are being imposed on the Dogger Bank off the east coast of England. This will not only require disgraceful levels of subsidy but will sterilise large areas of the Southern North Sea geology from which the private sector could produce gas with no requirement for a government subsidy.
The UK, and in particular Scotland, has a unique asset in the huge volume of coal lying beneath the sea bed around our coasts; even Jeremy Corbyn has seen the value in trying to revive its exploitation. Still, it should only have been expected that the potential application of an established process called Underground Coal Gasification (UCG) – rejuvenated by the application of innovative new technology – to generate value from the UK’s stranded deep coal reserves would see radical anti-hydrocarbon groups mislead local communities about the risks involved.
Proposals for UCG are restricted to offshore coal reserves and are centred on heavily industrialised parts of the country where local issues associated with traffic and noise become an irrelevance. Lurid visions of uncontrolled mine fires are useful for those opposing UCG development, but the truth is that they couldn’t be further from reality. The evolutionary development of UCG from its initial deployment in the 1930s has clearly shown us that appropriate site selection, design and operational controls will result in an operation where the environmental risks are fully mitigated.
That simply leaves the real issue that motivates the anti-hydrocarbon groups, which is that UCG produces CO2 and therefore can’t possibly be permitted. Luckily for us it has long been recognised that one of the key benefits of UCG is that it is entirely complementary to Carbon Capture and Storage (CCS). While those in opposition quickly point out that CCS is unproven, Scotland is at the forefront of CO2 storage research, driven by government and industry through a recognition of its absolute necessity and a passion for engineering innovation. Like UCG, commercial CO2 storage could soon become a lucrative reality for Scotland and a new start for the North Sea.
I was involved in the early days of North Sea oil exploration; those were heady and dramatic days, untrammelled by militant environmentalists. People and companies were doing things that had never been done before: innovators and pioneers were working for the benefit of all by creating a new industry, bringing hundreds of thousands of jobs and transforming Aberdeen from a fishing village into a global centre of engineering excellence that is home to nearly one third of Scotland’s top 100 businesses.
My company, Cluff Natural Resources, has identified the huge potential for a modern UCG industry to extract value from the UK’s stranded coal resource. This week we released the results of an economic impact assessment that highlights the potential for almost £13 billion of value added to the British economy, much of which would be retained in the region that is quickest to seize the opportunity in front of it. The industry has the potential to create up to 12,000 jobs in peak years, as well as supporting thousands more in the chemicals industry – with nearly 5,000 of these jobs in Scotland, and more than 1,000 alone in the Firth of Forth area, where we are passionately committed to beginning our very first UCG project.
What we ask for now is the political clarity that will allow us to continue investing in Scotland and excite communities about the opportunities that will arise from a North Sea Mark Two.
Algy Cluff is executive chairman and chief executive officer of Cluff Natural Resources.
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