International Coal and Climate Summit, Warsaw, Poland 18-19 November 2013

The decision to hold the World Coal Association (WCA) summit in Warsaw alongside COP19 of the UNFCCC in the same city was reported by some of the press as controversial and even provocative. Protestors, however, were few and far between with those who had made it onto the roof to drop “Coal before people” banners and who had handcuffed themselves to the door of the government building where the summit was held, had been cleared out of the way well in advance of the start of the meeting.

Milton Catelin, Chief Executive of the WCA opened the proceedings with a comment acknowledging the reported indignation, but pointed out that the WCA summit meeting was held annually and independently of the UNFCCC but that the timing should be regarded as fortuitous.

Janusz Piechocinski, the Polish Deputy Prime Minister, welcomed the meeting to Poland, acknowledged Poland’s significant dependency on coal but stated that Poland was showing an increasing commitment to emission reduction.

Christiana Figueres, Executive Secretary of the UNFCCC, made relatively strong statements regarding the need to move away from fossil fuels under the convention, calling for “coal to change rapidly and dramatically” and for signatory countries to “close all subcritical plants” and “leave existing reserves in the ground”. Citing the late US President, John F Kennedy’s commitment to, and success in, getting a man on the moon within a 10 year time frame, she suggested that the move away from fossil fuel should be achievable within a similar timeframe with the required commitment.

The former Polish Prime Minister, now Minister of the European Parliament, Jerzy Buzek, gave a welcoming speech which briefly mentioned how Poland had already met its Kyoto commitments.

Godfrey Gomwe, Chair of WCA Energy and Climate Committee and Chief Executive Officer  Thermal Coal, Anglo American, spoke emotively about fuel poverty from personal experience -his first encounter with an electric light bulb being at university. He emphasised that coal would be the fuel of choice for many areas because of cost and availability. “You may wish it away, but coal is not going away”. He cited IEA data which predicts that 50% of the solution to global poverty is coal. “If these areas are to even consider high efficiency low emissions (HELE) technologies, then there will need to be significant action and financial support from the international community”. Like many of the speakers on Day 1, Gomwe cited the IEA data which suggests that, if all the world’s coal-fired plants increased their efficiency from the global average of 33% to 40% then global CO2 emissions world be reduced by 2Gt – three times the requirement under the Kyoto Protocol. Gomwe suggested that the decision of several international funding agencies and banks to stop funding non–HELE plants would mean that developing regions would simply approach other, smaller banks to fund cheaper and dirtier installations which would have exactly the opposite effect to that desired.

Following the opening session there was a very interesting panel discussion on coal and climate change; the most interesting points made are summarised below:

– Christophe Frei, Secretary General of the World Energy Council stated that it was a “myth to believe that fossil fuel use will decrease, never mind go away.” But he stated that it was also important to note that, for all the fuel use predictions into the future, coal has the greatest uncertainty, with error bars of up to plus/minus 50%. And this is “scary” for investors.
– Brad Page, Chief Executive of the Global CCS Institute, noted that HELE and CCS (carbon capture and storage) were both needed for coal’s future.
– Ashok Bhargava, Director of Energy at the ADB (Asian Development Bank) noted that HELE was already being deployed in China, with a 10% increase in the average efficiency of Chinese plants over the last 10 years. The HELE approach has 3 major benefits in these regions – an improvement in energy efficiency, an increase in energy availability, and a reduction in emissions, along with all the associated benefits. The ADB therefore aims to ensure that any newly funded plant must be higher efficiency than the last installed and funded plant in any funded country.
– Frei warned that coal is not a short term investment and therefore the industry needs to take a leadership role and reassure investors that the investment is secure.

Pavel Smolen, President of Euro Coal, said that public opinion on CCS needs to change. CO2 is not dangerous. The key is transportation, since it remains as the biggest barrier to CCS deployment in many areas.

Stephen Anderson, Institute for Governance and Sustainable Development, pointed out that the USA had invested $0.5 billion in CCS and that, thanks to information dissemination, there is growing public understanding and acceptance of CCS in the USA.

Milton Catelin reiterated that industry should lead, since governments are not good at shaping industry’s future. He suggested that the USA is wrong to exclude new plants without CCS and to move towards reliance on shale gas as the coal will simply go overseas (to potentially dirtier plants) with negative consequences. Page argued that government support and the opportunities for EOR (enhanced oil recovery) in the USA made it very viable for CCS to succeed in the USA whereas elsewhere, it requires significant investments risk. And without consistent and supportive government policy, CCS will continue to be seen as a financial risk. However, for CO2 offsetting, CCS is cheaper than offshore wind and photovoltaic and therefore governments are subsidising the wrong things. There is plenty of potential for carbon storage but the coal industry needs to show some industry leadership and educate the public to gain support.

The panel was then asked “Should plants only be built if they have CCS”?  Smolen replied that this would kill all new plant development and stall progress. Bhargava agreed that this would not work in practise, especially in the developing world. Frei said that this approach would not be feasible in the short term. However the US signal (of setting a low CO2 emission limit) may spread quickly, whereas the alternative of an appropriate carbon price would help the business case and could mean that a legal approach would not be required.

Andersen noted that the climate case will require CCS in the long term and that it is in the interest of the industry for development investment to happen now, thus avoiding legislation. Page warned that legislation could be a dangerous way to go since countries such as Japan do not have good storage prospects. CCS will only work where it makes sense. Catelin referred back to the points that had been made about how restrictions on new coal build to HELE requirements condemns many populations to fuel poverty.

The question was then raised as to whether wealthier countries should provide funding and technology transfer to developing nations. Catelin argued that banks should operate primarily to alleviate poverty. However, public funds are being used to invest in renewables and this detracts from investment in CCS. Investment is currently based more on ideology than sense.

Frei noted that big innovation needs big collaboration. Work is needed on electricity storage as well as a cost drop in CCS. Bhargava reminded the discussion that banks such as the ADB required a commitment from national governments to environmental issues before funding is given. However, CCS cannot compete for international funding in the current situation – a CCS specific fund is needed. Catelin noted that CCS should be (and will be) included under the Clean Development Mechanism (CDM). He also reminded the discussion of the financial benefit between 1st and 2nd generation developments. The cost of CCS between the first plant- (the Sask Power Boundary Dam project in Regina, Canada) and the next plant will drop by 25%. However, it is important to remember that efficiency improvements offer a faster and cheaper route to CO2 reduction as a precursor to subsequent CCS deployments.

Page agreed, adding that the loss to parasitic load from carbon capture would also drop by up to 15% within the next 5-10 years. This could then come down further quite quickly, depending on deployment. The more projects that go ahead, the faster we will learn and improve and the more accepted and affordable the technology will become.

When the floor was opened to general questions there were a few questions from journalists as to why coal has not been phased out. There were also statements from climate sceptics. One French journalist suggested that “clean coal is an oxymoron.”

Catelin replied by arguing that coal could solve the problems that it is creating. There was then some light discussion as to whether it should be called “cleaner coal”. Bhagarva argued that the coal industry was more than aware of the issue and this is exactly why the industry is working   so hard towards a “clean coal image”.

The 2nd session dealt with the policy context for clean coal in the EU, led by Brian Ricketts of Euracoal. Baroness Worthington, founder of a green action group called Sandbag, gave a somewhat challenging presentation on how renewables were the answer. The following presentation, by Jacek Kaczorowski, General Director of PGE in Poland, brought us back to the issue of coal, arguing that Poland had already met its commitments under Kyoto whilst relying on coal for over 80% of its primary energy demand.

Humberto Delgado Rosa, of the European Commission, outlined the European roadmap towards the 2050 target. Proposals for projects under the less distant 2030 framework are to be considered in January 2014. There will be 300 million allowances from the EU Emissions Trading Scheme (ETS) for financing CCS projects at commercial scale (50% cofunding). However he noted that the ETS is currently not driving investments as the price is too low and there is a surplus of 2 billion allowances. There has been a proposal that the surplus will the “back-loaded” – removed from current availability and fed back into the scheme later, but apparently this proposal may be rejected by countries such as Germany.
Joachim Lambertz, of RWE gave a summary of clean coal concepts and potential under Euracoal’s 3 step strategy:
1 reduce emissions using state of the art systems and improve older plant efficiency;
2 develop next generation technologies (HELE); and
3 deploy CCS as “less integrated and therefore less complex activities within the context  of public CCC infrastructure, open to all”. Taking an infrastructure first approach  (establishing pipelines and storage areas) will ensure that CCS is widely deployed.
John Topper, CEO of IEA Coal Research Ltd, chaired a session on breakthroughs in clean coal technologies. Didier Houssin, IEA, noted that the ageing fleet of coal-fired plants in OECD countries could prove more of a challenge for CO2 reduction than plants in emerging economies, which are often newer and more efficient units. The CCS roadmap produced in 2013 by the IEA includes an outline of a financial support mechanism which has the implementation of policies for exploration and deployment of storage sites as well as improving public awareness.
Mike Monea, President of CCS Initiatives, Sask Power, gave arguably the most welcomed talk of the day, outlining details of the $1.3 billion full scale CCS plant on the lignite Boundary Dam Unit 3, Regina, Canada, which is due to start trialing in January 2014 with final deployment in April. The system will capture at least 90% of the CO2 from the unit, giving a CO2 emission concentration of 140 t/GWh, well below the new Canadian standard of 420 t/GWh for new plants. The plant is economically viable because the CO2 can be sold for EOR.
Giles Dickson of Alstom gave a summary of CCS options and described the White Rose 426 MW demonstration project proposed at Drax, where the CO2 captured will be piped to the North Sea. The pipeline proposed may be funded by the National Grid and then made available for other CCS projects.
Delome Fair, of GE Gasification, detailed the IGCC project at Edwards Point in the USA which has been operational since 2013 – the longest running and “cleanest” IGCC unit in operation. The plant actually went on to win one of the new WCA Industry prizes at the award ceremony that took place later that evening.
There was then some questions from the floor which drew several interesting comments from the panel:

– The Chinese government is known to be very supportive of CCS development, as is South Africa, and there is even work ongoing in Saudi Arabia;
– The Chinese may play a significant role in the move towards cheaper CCS as they move 1st generation technologies into more affordable 2nd generation developments.
– The contribution of CCS to CO2 reduction under the EU 2030 strategy is comparable to that from the entire renewables sector.
– The move to more efficient plants, now up to 47%, will also result in significant CO2 reduction from future build. R&D to take this beyond 50% could further enhance the CO2 reductions.

The final session of the day dealt with financing and international cooperation. Discussions returned to the question of how to incentivise investors into what could be regarded as a risky market. Zola Tsotsi, Chairman of Eskom, reiterated the importance of coal in countries with growing economies and energy requirements. Annika Seiler of the ADB emphasised that the Bank would only fund plants that were supercritical or above in efficiency, that improved energy security in the host country and that formed part of an “ongoing policy dialogue” with the host government. This included plants in China, India, and Vietnam. The ADB has also established a CCS specific fund using AUD21.5 million from the Australian Government and £35 million from the UK government. This fund will be used to accelerate CCS development and lower barriers to deployment.
Frank Schutlmann, Karlsruhe Institute of Technology, discussed existing legislation and the technologies available for compliance. He also reported on a new calculation model being developed which may be used to calculate cost effectiveness of technologies used to achieve compliance.
Marion Wilde, of the European Commission, summarised the work under FP7 and Horizon 2020. There are European programmes amounting to 5.4 billion euros for “secure, clean and efficient energy”. And there will be a new call for projects, launched on 11 December which demonstrates their commitment to investing in new coal projects.
Day 1 closed with quite a buzz about how the Summit had perhaps not managed to give the correct message to the media about what it was hoped it would achieve. It was noted that the journalists present were swift to use sound bites such as “clean coal is an oxymoron” and “choose people – not coal” but that the coal industry was not good at giving sound bites in its own defense. Several speakers commented on how the public did not seem to be aware of the continued importance of coal for energy and the amount of work being invested in cleaning up the industry. There was the suggestion that there needs to be some intermediary to act as spokesperson for the industry – to be able to provide sound bites and information for public dissemination without being misinterpreted as industry propaganda.
Day 2
Day 2 of the summit moved very distinctly into more technical papers and many delegates commented on how we had moved from discussion into what was more like a normal coal conference. The first session of the day dealt with innovative coal technologies such as coal to X, UCG (underground coal gasification) and coal bed methane (CBM) – all technologies which can prove advantageous in both energy efficiency and carbon reduction. The 2nd session dealt with the climate and environmental footprint of coal, moderated by Andrew Minchener, General Manager of the IEA Clean Coal Centre. The session included papers on improving energy efficiency in advanced pulverised plants and also in fluidised bed systems. The policy of carbon capture was also discussed, drawing a rather detailed question on the safety of deep CO2 storage which was handled expertly by Ellina Levina of the CCS Unit of the IEA. Lesley Sloss, of the IEA Clean Coal Centre, gave a short summary of the existing and impending legislation affecting emissions from coal other than CO2, emphasising how the industry was achieving compliance in the face of increasingly challenging requirements.
The closing session of the day focused on the coal and energy sector in Poland. Kaliski, the Director of the Department of Mining Ministry of Economy, gave a personal view on the challenges facing the mining sector in Poland over the next few decades. Lignite seems to have a better future than coal, although it all depends on the economics. Although the session included interesting talks on CBM, improvement in mining capabilities and the balance of cost for the industry in the face of increasing legislation and lowered coal price, there was a feeling that the session would have benefitted from papers focusing on how Poland plans to clean up its image and match the demands of the COP19, taking place only a few miles away.
There were a few statements, comments and buzzwords which could be regarded as summarizing the strongest issues of the summit:
– Coal’s image is not good and is not getting better
– Coal needs to improve its relationship with the media and the public to raise awareness of just how much is actually being done
– Legislation is required for change but this has to be achieved carefully. If legislation excludes any new build without CCS this mean that many international banks will only fund plants with CCS. Since these are not yet commercially available, developing regions desperate for power will simply seek funding elsewhere and build cheaper and dirtier units which will lock in CO2 to the global budget for decades to come
– “policy fatigue” is setting in – the industry is being targeted on all sides to the point where it is perhaps getting tired of the debate
– Funding for investment in the technologies which are needed (such as CCS) is insufficient. The industry needs a carrot rather than a stick
– Once the initial investments are made then the economics of CCS will improve rapidly and the industry will be in a position to provide the technology leaps required for a rapid deployment of new technologies.

Many delegates agreed that the full scale CCS plant at Boundary Dam could be a turning point for the industry. Success will encourage investment in more projects and we will be on track to start down the route to reduction in cost and widespread applicability. However, if the Boundary Dam project is not a success, then this may be the difference between coal meeting its CO2 reduction targets and the 2 Degree Scenario being unobtainable.