Europe looks to coal to reduce electricity prices

One year after The Economist signalled an ”unwelcomed coal renaissance”, Bloomberg News reported Jan. 6 that Europe’s lust for lower energy prices was reviving lignite mining for coal-fired generation in a big way.

Lignite, a low-quality form of coal that contains less units of energy and greater volumes of carbon than traditional coal, is once again the prize European energy firms are seeking in open-pit mines in Germany, Poland and the Czech Republic in an effort to wrestle high-energy prices to the mat.

According to Bloomberg, new coal developments “go against the grain of European Union rules limiting emissions and pushing cleaner energy.” However, “alarmed at power prices about double U.S. levels, policy makers are allowing the expansion of coal mines that were scaled back in the past two decades.”

By comparison, Ontarians enjoy a significantly lower electricity rate than their European counterparts. The average electricity rate among Europe’s largest cities is 20.42 (EURO) cents per kilowatt/hour, which works out to approximately 30 (CDN) cents. This is well above the 2013 average price of electricity in Ontario at 8.55 cents per kilowatt/hour.  

Those anxious of the impact a resurging coal market could have on renewable energy in Europe needn’t worry, according to Barry O’Flynn, environmental finance and clean technology director at Ernst & Young LLP.

The lignite upswing may ultimately boost support for wind and solar projects by increasing public attention on the health, environmental and economic downsides of burning fossil fuels, he believes.

“There will be increasing emissions restraints and controls in the years ahead,” O’Flynn told Bloomberg. “Lignite is not a threat to renewables. It could benefit them, since the emissions from lignite-fired plants will need to be offset” under European Union pollution restrictions.

Ontario’s love affair with coal concludes

The shift in Europe comes as expanding shale gas exploration is making the economic case for natural gas more attractive in the United States than burning coal, despite the influence of entrenched coal interests there.

It also occurs against the backdrop of Ontario signalling the end of its on-again, off-again love affair with coal in 2013.

Premier Kathleen Wynne welcomed environmentalist and former U.S. Vice President Al Gore to Toronto on Nov. 21, 2013 to celebrate the announcement that Ontario’s two remaining coal-burning generating stations would use up the remainder of their coal by the end of 2014.

“To solve the climate crisis, we need people, provinces and countries to show the way forward towards a coal-free, sustainable future [and] Ontario has distinguished itself as a leader in Canada and around the world,” Gore told the assembled crowd in the MaRS Building’s packed atrium in Toronto.

“It is heartening to see the tremendous progress that has been made here and it is my hope that others will quickly follow suit.”

The Gore announcement was complemented by Environment Minister Jim Bradley signalling the government’s intention to introduce the Ending Coal for Cleaner Air Act. This would require any future legislature that wishes to bring back coal-fired electricity generation in Ontario to debate the move at Queen’s Park, rather than make it happen through closed-door regulation.

But while coal-fired electricity generation may be slated to wind down by Dec. 31, 2014, broad exemptions for coal-burning industries like steel manufacturing and cement production will ensure more than 11 million tonnes of carbon dioxide will continue to make its way into Ontario’s air every year.

This CO₂ pollution, emitted from 18 facilities that will continue to use coal for production purposes, will contribute 6.47 per cent of the province’s total CO₂ emissions of more than 170 million tonnes.

Bradley told reporters in November he believes the governing Liberals have been clear that their commitment to eliminate coal burning in the province extends no further than shutting down Ontario Power Generation’s Thunder Bay, Lambton, Atikokan and Nanticoke generating stations.

“Our commitment was clearly on the production of electricity using coal and those were the main sources in this province over the years, the coal-fired plants,” Bradley said.

“I think the public is aware from certainly all the information that we have provided that our announcement deals strictly with the production of electricity by the government of Ontario” and is not an overall coal ban.

Subsequently, the Liberals announced on Jan. 8, 2014 that the massive Nanticoke plant on Lake Erie, once the largest coal plant in North America, had ceased production in late December. This leaves OPG’s Thunder Bay plant the last provincial dinosaur standing.

Yet while the Thunder Bay station is slated for conversion to burn advanced biomass by the end of this year, Nanticoke will simply be mothballed and await a conversion to natural gas that may never come.