Coal's Boom May Mean Kyoto's Bust

Coal's Boom May Mean Kyoto's Bust

When Blair Boone walked away from Cape Breton's COAL mines, he thought it was forever. It was December 2001, and the government-owned Cape Breton Development Corp. had just shut down the last of its Nova Scotia collieries due to chronically bad financial performance. Global coal prices had been on a slide for years, and it seemed the world was headed for a future dominated by cleaner fuels like NATURAL GAS and environmentally safe energy sources such as SOLAR and WIND power. Dirty to burn, dangerous to mine and increasingly unprofitable to sell, coal was considered a fuel of the past. Boone, a mining technologist specializing in underground ventilation, was among the final group of 440 men to be let go. And when they walked out of the deeps that day three years ago, they left behind a local industry that dated back to 1720, employed 12,000 at its peak, and claimed 1,400 lives along the way. King Coal's reign in Nova Scotia was over.

Or so everyone thought.

They hadn't counted on east Asia going middle class, or the United States re-embracing a cheap, abundant fuel source. In the past 12 months, the global coal market has staged a recovery that is nothing short of stunning. Exploding economic growth in China and India has sharply increased demand for coal-fed power and steel there, reversing the long downward trajectory of coal prices. At the same time, the rising cost of natural gas has forced utilities in the U.S. and elsewhere to return to coal as a major source of fuel for electricity generation. As a result, a commodity that was selling for less than US$40 a tonne a couple of years ago is now fetching more than US$125, and analysts expect another healthy jump in price this year. Suddenly, coal is a fuel with a big future - and all those dead coal mines in places like Cape Breton and northeastern British Columbia are showing new signs of life.

Boone and 25 of his fellow ex-miners recently formed a co-operative and, together with Vancouver-based Hillsborough Resources, hope to re-open the Donkin mine, just east of Glace Bay, N.S. - a network of abandoned tunnels with access to about 300 million tonnes of coal, in veins stretching out for miles beneath the Atlantic Ocean. Each man has pledged $20,000 of his own savings for a small stake in the $100-million project, which would create up to 250 jobs at the mine and an on-site power plant. For every one of those positions, there are hopes for four spinoff jobs in the surrounding communities. "It'd just be a tremendous boost for the people here," Boone says. "We'd go back underground tonight if there was a shift and we got the call."

But Boone knows it's not that simple. It never is when it comes to coal. The coal industry's resurgence presents a paradox for nations like Canada. On the one hand, as a major exporter of coal, the country stands to benefit enormously from the boom. But that prosperity comes at a heavy cost: it means the world's addiction to the dirtiest of all industrial fuels will deepen. Acid rain, greenhouse gas emissions, the spread of toxic metals like mercury, a rise in respiratory illnesses - these are all byproducts of coal-fuelled growth. They threaten to derail environmental efforts that Canada has helped champion around the world, such as the Kyoto Protocol on greenhouse gas emissions. Advocates for the environment realize we can't stop the developing world from using a fuel that helped the West get rich, but they offer a stark warning: unless wealthy countries act quickly to deploy cleaner coal technologies, global agreements like Kyoto will stand as hollow symbols of the failure to stem an ecological disaster. "I go to bed at night worried about this," says John Thompson, a lobbyist with the Boston-based Clean Air Task Force. "I believe in renewables, and wind power and solar. But if we don't change the course of coal, we will lose. Global climate change will be something we can't do anything about."

Until last year, China was among the world's major exporters of coal. Like the United States, Australia and Canada, it's blessed with huge supplies of hard black rock formed over millions of years as ancient peat bogs decayed and compressed. But as its awakening middle class builds homes, buys cars and joins the world's consumer culture, China's demand for electricity and steel - most of which is forged in furnaces fuelled by high-grade coal - has surpassed the capacity of its mining industry. The result: the country now ranks among the world's top coal importers. It has roughly 2,000 coal-fired power plants, and there are plans to double generating capacity in the next 15 years. Most of the new plants will rely on coal combustion, too.

But China isn't the only place with a mounting hunger for coal. Worldwide, coal consumption is projected to rise by 44 per cent between 2001 and 2025, and some of that increase is courtesy of the West. Coal plants still provide 46 per cent of North America's electricity. In the U.S., there are roughly 100 new plants awaiting approval from local and state governments. Five Canadian provinces - Ontario, Alberta, Saskatchewan, Nova Scotia and New Brunswick - still burn coal for power. The Ontario government has promised to close its remaining coal plants by 2007, but some observers doubt it can meet that deadline while satisfying the province's power needs. And B.C. has said it will consider coal if and when it adds generating capacity.

It all amounts to arguably the biggest threat to the global ENVIRONMENT and its population, because coal pollution takes numerous forms, each with serious health implications. First, there are emissions of sulfur dioxide and nitrogen oxides - known to scientists as SOx and NOx - both of which are major contributors to acid rain. NOx also contributes to the depletion of the ozone layer. Then there are emissions of particulate matter, which cause urban smog and respiratory ailments such as asthma attacks. And there is the sheer volume of the pollution to consider. A typical coal-fired plant produces more than twice the carbon dioxide in a year as a natural gas plant, and about 25 per cent more than an average oil power plant, according to a study conducted at the University of Wisconsin.

North American utilities dramatically cut some emissions in the '80s and '90s, through technological innovation and by burning higher grades of coal, but other pollutants - toxic mercury and cadmium, and CO₂, among them - continue to spew at alarming rates, says Alan Nogee, director with the Massachusetts-based Union of Concerned Scientists.

The worldwide consequences of those emissions are becoming distressingly clear. Carbon dioxide in the atmosphere, roughly one-third of which comes from coal-fired power plants, has risen exponentially over the past century. Meanwhile, researchers at Harvard University recently tracked chemical clouds from Southeast Asia to New England, proving that air pollution travels across oceans and continents, and suggesting the buildup of mercury in North American lakes is tied to rising emissions half a world away.

For now, however, warnings about dangerous airborne chemicals are trumped by the world's desperate need for power and the high costs of cleaner fuels. Adding to the urgency are concerns about the size and security of the world's PETROLEUM reserves. Global coal supplies, in contrast, are estimated at more than a trillion tonnes - enough to last 210 years at current consumption rates. What's more, the coal is there for the taking, since the world's biggest reserves - 270 billion tonnes - are in the U.S. And while coal prices have climbed sharply over the past year, the fuel still produces energy far more cheaply than natural gas or oil.

With all those economic and political forces at work, it's no wonder that jet-black gashes have been re-opened in the jagged hills of northeastern British Columbia, where the Alberta flatlands begin the climb into the Rocky Mountains. The same economic realities that shut down Cape Breton's mines closed the coal industry around Tumbler Ridge, B.C., a few years ago. And now, the same reversal of fortune is bringing it back.

Two mines in the area have opened in the past year, and the provincial government intends to approve several more in the coming months to feed metallurgical coal to the steel mills of Asia. The hope is that this bull market will revive the depressed region. "What we've got is probably a once-in-a-lifetime opportunity here," says Pat Bell, B.C.'s minister of state for mining. "At this time last year, there was no coal at all coming out of this region. Now they're producing about two million tonnes a year, and that could get to 15 or 16 million within a few years." That means jobs, and a newfound sense of optimism. Houses in Tumbler Ridge that sold for $28,000 two years ago now go for up to $90,000, Bell says, and there are plans to build more.

Bell admits the environmental concerns are real, but points out that his province's coal is high-grade and thus comparatively clean to burn. And besides, if Canada doesn't feed worldwide demand, someone else will. "People need to ask themselves, would you prefer to have a place like British Columbia, which cares about the environment and works hard to protect it, operating mines, or would you prefer some environmental mecca like, say, Russia, doing it?" Bell says.

It's true that the worldwide explosion in coal use is an irresistible force. Even environmentalists acknowledge it can't be stopped. John Thompson of the Clean Air Task Force says the only way to avert environmental calamity is to convince major utilities around the world to adopt cleaner coal technologies - many of which already exist but are underutilized. The problem, he says, is that the most promising ones remain commercially unproven, and the power industry resists major change, especially when it involves higher costs.

That resistance is particularly strong in developing nations, explains John Drexhage, a director of the International Institute for Sustainable Development in Ottawa. "On the one hand, China has as much right to develop the way the U.K. or Germany or the United States did: on the basis of coal as a fuel. On the other hand, if China does develop that way, it's going to have global environmental consequences unlike anything we've seen before."

There are some reasons to hope that worst-case scenario can be averted. In 2002, President George W. Bush unveiled the Clear Skies Initiative, mandating further reductions in sulfur, nitrogen and mercury emissions from power plants, though environmentalists promptly attacked the new rules as woefully insufficient. In 2003, he introduced FutureGen, a US$1-billion, public/private project to build the first zero-emissions coal power plant by 2014, providing a proving ground for the newest technologies.

Transalta Corp., one of Canada's largest operators of coal-fired power plants, has announced a zero emissions initiative of its own, aimed at vastly reducing the release of carbon dioxide from its plants. To do so, the utility plans to increase the use of renewable energy and introduce new technology at its coal plants - though it also intends to rely strongly on "offsets," such as tree planting, that absorb CO₂. Europe, meanwhile, plans to cut its coal use by one per cent a year over the next two decades. Developing countries like China have been slower to address greenhouse gas and water pollution, but Chinese officials have expressed concern about local air quality and are introducing tighter controls on the release of sulfur and nitrogen gases.

Nevertheless, experts worry that most "clean coal" programs are too little and, given that they're scheduled to unfold over the next 15 to 20 years, will be too late. Still more problematic is the fact they don't include plans to spread the technology to poor countries. Unless rich nations promote economic growth by cleaner means, providing technology transfers and environmental aid to the developing world, Drexhage fears the West's good intentions will be enveloped in an acrid cloud of coal smoke drifting across borders from its poorer neighbours.

Understandably, the industry prefers to focus on the positive. Allen Wright, executive director of the Coal Association of Canada, which represents many of the country's coal miners, says technological advances make coal an attractive solution to the world's energy shortage. "I'm not saying we don't have problems," he says, but adds, "You have to look at the economic, environmental and social benefits of everything, because there isn't an energy source out there that doesn't have some baggage."

In places like Cape Breton and Tumbler Ridge, residents have already done the economy-versus-environment arithmetic. For Blair Boone and others, the restoration of their livelihoods and community is paramount. The hope buried in the empty tunnels of the Donkin mine is worth whatever trade-offs must be made and whatever baggage coal might bring with it. "All we ever talk about in this family is mining," Boone says. Let the politicians and the scientists search for ways to bring a happy compromise for the industry, the economy and the planet - but the time to find that compromise is short. And the stakes couldn't be higher.

"We've simply got to find a way to move coal from being a cause of massive pollution and global warming to being part of the solution," John Thompson says. "And if we don't do that . ..." He pauses to consider the implications of failure. "It's over. It really is."

Clean technology for a dirty fuel

In the race to mitigate coal's deadly effects on the environment, three main technologies have emerged. While they're promising, Alan Nogee with the Union of Concerned Scientists warns that "coal will always have permanent and irreversible damaging impact on land and water."

SCRUBBERS

A range of technologies that work inside coal-burning power plants to filter out contaminants such as sulfur dioxide and nitrogen oxide. Most mix crushed limestone with water and then spray the mixture into the gases produced by coal burning. Sulfur particles bond with the limestone, creating a paste that's then disposed of. NOx gets broken down into non-polluting nitrogen and oxygen by spraying catalyst chemicals.

Pros: Several methods already exist that can eliminate close to 98 per cent of sulfur dioxide and nitrogen oxide emissions. Others can filter out toxic metals such as mercury from plant exhaust.

Cons: Scrubbers cannot reduce CO₂ emissions. Despite wide availability, the technology is used in only about a quarter of U.S. plants because regulations exempt plants built prior to 1978, and because burning higher grades of coal can often satisfy pollution limits. In China, where enforcement of environmental rules is inconsistent, only five per cent of plants use the equipment.

IGCC SYSTEM

IGCC, for Integrated Gassification Combined Cycle, is a system of power generation that chemically converts coal into a fuel called syngas, stripping out harmful chemicals before the fuel is then burned in much the same way natural gas would be.

Pros: IGCC power plants are almost as clean as natural gas plants.

Cons: The technology is fundamentally different from and more expensive to operate than traditional coal plants, making the industry reluctant to adopt it. IGCC plants still produce large amounts of carbon dioxide.

CARBON SEQUESTRATION

A process by which machinery cools waste gases and absorbs carbon dioxide before it is released into the atmosphere.

Pros: When used in conjunction with IGCC technology, it can virtually eliminate the release of greenhouse gases into the air.

Cons: Commercially unproven. Very expensive to deploy. Questions remain about how to dispose of the trapped CO₂ (some have suggested compressing it into a liquid and injecting it into underground aquifers).

HEATING UP: COAL USAGE ... AND EMISSIONS

In addition to higher emissions of sulphur dioxide and nitrogen oxide, coal-fired power plants release more C02 than any other major fuel source for electricity generation.

IN KG PER MEGAWATT HOUR

COAL 974

OIL 726

NATURAL GAS 484

NUCLEAR 17

HYDRO 3.1

Source: University of Wisconsin

Maclean's January 17, 2005