Aid Scheme demands cash return

McCloskey Awards

New Chairman for CoalPro

NIGEL YAXLEY, Marketing Director of UK Coal Mining Limited, was unanimously voted Chairman at CoalPro's Annual General Meeting earlier this month.

Nigel joined the coal industry in 1977 after graduating in Physics from Cambridge University. He has pursued a career in Sales and Marketing, with the National Coal Board, renamed British Coal in 1986, working in Yorkshire, and at London and Nottinghamshire Headquarters.

Vice Chairman - England & Wales

MEL HUNT, Commercial Director of member company H J Banks & Company Limited was unanimously elected as Vice Chairman - England & Wales at this month's Annual General Meeting.

J SCOTT BROWN was re-elected Vice Chairman - Scotland.

Large Combustion Plant Directive (LCPD) - Update

David Brewer, Director General

AS explained in the last COALpro Newsletter, the most critical decision associated with the implementation of the LCPD is the choice between Emission Limit Values (ELVs) or a National Emission Reduction Plan (NERP). Much the more favourable route for future coal burn, particularly of higher sulphur UK coals, would be the ELV route.

The action plan we put in place in March seems to have made at least some progress. Replies to our letters to Ministers were concillatory and suggest that minds are not closed (or have been re-opened?). We have been told for several weeks now that a preliminary decision is "imminent", but it has not yet been announced. Perhaps DEFRA has had to stop and think? We have been told by a source who specifically asked not to be identified that "the argument is very finely balanced"!

Whichever way this initial decision goes, all is not either won or lost. Having established their preferred implementation options, DEFRA will publish a final consultation paper. If the NERP route is selected, we get to fight another day, although it will then be difficult to change minds. If the document favours the ELV route, we will still have to argue forcibly for it to be retained.

Whilst the Electricity Association now favours the ELV option, not all coal-fired generators are in the same camp. FGD plant and plants for which FGD is contemplated (eg Aberthaw, Longannet) will be more favourably placed with ELVs. The owners of plant not contemplating installing FGD (eg Alcan) will be better off under a NERP. They have argued strongly against ELVs and can be expected to continue to do so.

Nor is the ELV/NERP decision the only LCPD interpretation issue. For opted out plant there are important questions still to be resolved as to what constitutes a single plant and what constitutes an operating hour under 20,000 hours derogation limit. There will still, therefore, be plenty to argue about when the consultation document is finally published.

To add insult to injury, the Environment Agency (EA) has recently issued a paper on their preliminary assessment of what constitutes Best Available Technology (BAT) for controlling emission. Even for opted-in plant under the ELV route, the paper states that the bubble limit will reflect the availability of low sulphur coals at FGD-fitted plant. This is preposterous and we have written to the EA to say so.

Dr Ian Roxburgh, Chief Executive of The Coal Authority has also taken up this issue directly with Minister Brian Wilson.

There is clearly still much to do.

CoalPro launch Health and Safety Induction Video

PRODUCED in VHS and DVS formats to detail the safety procedures and standards expected from all new operatives employed on surface mining sites, this 11-minute video programme gives a personal touch to the key guidelines.

Safety engineers believe the programme to be a major boost to the standard induction course and the decision to develop the video has been welcomed by the Health and Safety Executive.

Filmed on two member sites, the video covers first aid, ppe, use of seat belts and the need for risk assessment while doing even the most routine jobs. It also explains how operatives should deal with spillage so they can take the right action, outlines reporting of accidents, and highlights the do's and don'ts needed when using chemicals and other safety matters.

Copies of the video can be ordered from Confederation House - email: admin@coalpro.co.uk.

The Emissions Trading Directive

David Brewer, Director General

AS if the LCPD were not enough, the next missile from Brussels is the Emissions Trading Directive (ETD). At best under the LCPD, with favourable decisions on the implementation issues, and a reasonable amount of FGD plant, coal burn can be maintained at a fairly high level if coal remains competitive with gas. Under the ETD, there is no way we can be anything but worse off. It is a matter of minimising the damage.

What gave birth to the ETD appears to have been the concern of a number of Member States that they would be unable to meet their Kyoto commitments without some new policy instrument. Whilst we can indulge ourselves by pointing the finger at Brussels on this, it has to be said that the UK government jumped on the bandwagon with a fair degree of enthusiasm despite the fact that we will probably meet our Kyoto commitment without it because of the basket effect of all six identified greenhouse gases taken together.

In other words, the government will take the opportunity offered by the ETD as one means of moving beyond the UK's Kyoto commitment towards the intention in the Energy White Paper of reducing CO2 emissions by 15-25mt by 2020. The White Paper postulates a reduction of 2 to 4m tonnes of carbon per year from the ETD, implying a switch of 7 to 13mt of coal burn a year to gas. These figures can only be regarded as the broadest of assumptions as to the effect of the ETD. The range quoted is itself an indication of the uncertainty. The actual impact will depend upon a large number of inter-related variables. Trading under the Directive is due to commence on 01st January 2005, so the implementation timetable is very short. The first action is for Member States to develop a National Allocation Plan (NAP) whereby permits to emit carbon are allocated to plants covered by the Directive. This will apply to the first three-year trading period, 2005 - 2007. Industries covered in the first period are electricity generation, oil refineries, coke ovens, iron and steel, cement, glass, ceramic products and pulp and paper. In subsequent trading periods, the list may be extended and trading may be extended to greenhouse gases other than CO2. Emissions from burning biomass are assumed to be zero.

By December 2003, the Commission has to develop guidance on the implementation of NAPs. However, each NAP has to be published and notified to the Commission by 31st March 2004 and Member States must allow the public to express comments before a final decision is taken. The Commission has to accept or reject each NAP within three months of notification - ie by 30th June 2004 at the latest. It is clear that this timetable can only be met if Member States move quickly. To this end DEFRA have appointed consultants to advise them and their report is due to be published by mid-June.

A key feature for the first trading period is that the Commission has decided that permits will be allocated, not auctioned, although up to 5% of permits in the next trading period (2008-2010) may be auctioned. This avoids an up-front value being placed on carbon emissions and must be regarded as a favourable decision. Also, importantly, allocations are regarded as state aid (presumably because Member States are granting a right) and, as such, must not operate in a discriminatory fashion. This will prevent, for example, blatant discrimination in favour of gas at the expense of coal. In other words, the NAP is challengeable.

Having said that, there remains ample scope for very different results. For example, the NAP can be based on historical experience ("grandfathered" rights) or an expected experience ("benchmarking"), but in either case subject to some kind of ceiling. The clearly offers lots of opportunities for governments to fix the allocations with a view to minimising the allowances.

Even with "grandfathering", there are plenty of alternatives. For example, a base period of 2000-2002 would clearly favour coal burn more than any period including 1999 - the year of lowest coal burn. If the government was minded to select 1999 on its own, this might be challengeable. Historical experience might be based on actual emissions, fuel input or some measure of output (eg electricity generated). Allocations based on historical emissions would be best for coal. If the allocations were based on electricity generated, it would favour gas.

Even once trading commences, there is no clear way in which it might develop. The permits would seem to place a differential tax on different fuels (with coal taxed most heavily) but because the permits will be granted free, any cost will only emerge in trading. If, for example, a gas generator wishes to increase output, he will still have to buy the extra permits to emit more CO2. It might not suit him commercially to do so. Portfolio generators with both gas and coal plant may be best placed. They may be able to pool their permits but, even if they are not allowed to do so, they will be able to trade them internally at zero overall cost. Any emerging differential between coal and gas prices will be a key determinant

There is much to play for! In the first instance, we should consider establishing a group of experts to closely examine the consultant's report and to respond to the consequent consultation vigorously. In the long run, we may need to be prepared to mount legal challenges in conjunction with the coal-fired generators.

Watch this space!

Hatfield Power Park offers cheapest CO2 capture

Section 36 planning consent for the Hatfield Power Park on the South Yorkshire coal fields could kick start the hydrogen economy in the U.K. as well as separating CO2 for delivery to enhanced oil recovery sites in the North Sea.

However much havoc middle eastern hostilities have on western economies, they do tend to concentrate the minds of national governments on the fragility of the hydrocarbon fuel based fuel systems on which their survival depends, as well as adding increased urgency to the Kyoto commitments on carbon emissions and the need to accelerate the introduction of the "Hydrogen economy".

They may also heighten awareness of the need to maintain a balanced mix of energy sources to avoid the pitfalls of the nuclear overkill, the dash for gas, and ill conceived deregulation.

Last summer DTE Energy announced that it is to partner the U.S. Department of Energy in the first ever hydrogen power park project which would demonstrate all the basic elements of the much debated "hydrogen economy". Since the Iraq crisis, the pace has rapidly increased in race towards this goal. But such initiatives tend to be based on the production of hydrogen either by electrolysis of water, high temperature reduction of water with carbon, or cryogenic separation from air.

It seems altogether too ironic to turn to such energy intensive processes, even if remote renewable energy resources could be used, when simple, proven, coal gasification systems can both produce bulk hydrogen supplies as a by-product of electricity generation at the same time as separating CO2 for enhanced oil recovery and ultimate sequestration.

In February the U.S. DoE announced its FutureGen project - a $1 billion 10 year project to design, build and operate a nearly emission free, coal fired, 275 MWe electricity and hydrogen production plant. The origins of the proposed technology for this are not clearly stated, but all the elements required to achieve the stated goals are already inherent in the Hatfield Energy Park project. The Hatfield Power Park project, based on the Jacobs "GEM" technology described in the May 2002 issue of Modern Power Systems, pp 48 to 53, could be operating during 2006.

These systems can also virtually eliminate the key harmful emissions, including mercury and lch, more efficiently than present coal fired power generating stations, most of which are now due for replacement anyway.

They can also output a fuel gas to supply other power stations or process plants in the locality at a cost that is related to coal prices and availability rather than oil.

Hatfield Power Park

Planning permission and Section 106 have been granted for the project and with the receipt of Section 36 consent, the Hatfield Power Park project near Doncaster in the South Yorkshire coal fields promises to provide the bridge to the coal conversion power plant of the future.

The first phase of the project is a coal gasification power plant with an electrical output to the grid of some 432 MWe from a coal feed of 123.5 tonnes/h. Generation efficiency is quoted as 41.3 per cent for electricity only, or 80 per cent including chp output.

The second phase is presently conceived as a similar plant except that the emphasis will be placed on either fuel gas and/or hydrogen output. Output products can be varied with great flexibility to meet developing market conditions.

Future developments for the project are listed as:

• CHP for other business park ventures
• Export hydrogen for fuel cells
• Export oxygen, nitrogen and argon
• Export fuel gas for gas turbines
• CO₂ for North Sea enhanced oil recovery
• More power generation

Even with all this operational and market flexibility, the project's economic viability will depend on Government policy on gas and electricity market regulation, emission trading and carbon control legislation but given a realistic value for CO2 saving, the scheme could quickly achieve viability. Key decisions cannot wait until BETTA supersedes NETA or Kyoto commitments are met.

Assuming, as seems inevitable, that natural gas prices, and indeed electricity prices, must rise in the short term; the Hatfield Power Park is well positioned to solve a variety of pressing problems.

The site is surrounded by many casualties of the dash for gas and the anomalies of NETA. A large proportion of the largest and most efficient combined cycle power plants in the UK are either not running because they would be operating at a loss, or have been handed back under default to the developer's bankers who may or may not be running them. If electricity prices increase as expected it will be less expensive to do this than to write them down.

Many combined cycle plants developed on the assumption of base load dispatch cannot afford the costly plant upgrades needed to operate reliably under the kind of cycling load demands which characterise today's power markets.

Hatfield, which is surrounded by gas fired combined cycle plants on Humberside, Killingholme, Keadby, Saltend, etc. could supply a pipeline quality fuel gas at very economic prices along relatively short pipelines while at the same time delivering CO2 for EOR or sequestration via the North Sea terminals on Humberside. But there are more pressing local and national political incentives for backing this project.

The site

Coalpower owns 70 hectares of land zoned for industrial development, all of which is screened from existing housing. Of this 8 hectares are committed the new power plant, 17 hectares for Stage 1 of the new business park, and a further 16 hectares for Stage 2. Meteorological site data is given in Table 3.

The deep pit mine produces some 600 000 tonnes/year with a potential for 2 500 000 tonnes/year from the 100 million tonnes of contiguous low sulphur reserves.

Adequate water supply is available from an adjacent canal. The site has dedicated motorway spur and mainline railways run directly past the site.

As well as existing transmission grid and railway connections, there is a ready supply of natural gas available to the plant site at reasonable cost. There is a wealth of developable land available in the area to attract industrial, commercial and residential facilities which could benefit from the heat supply available from the project. The Yorkshire Development Authority has already identified three or four different companies which might use by-products such as the inert slag, pure sulphur and co-products such as steam and the hydrogen.

EU support and Bankability?

This area of South Yorkshire has been designated has already been designated as a European Regional Development Fund Area with Objective 1 status which involves the highest rate of economic and social intervention. This permits government funding of up to 30 per cent of capital investment. The developers are expecting at least 25 per cent which should make a radical impact on the bankability of the project. The estimated £380 million investment does not include any CO2 capture and sequestration commitment. During 2002 an independent Review of the remaining coal reserves of deep mines in the U.K. was commissioned by the Dti from IMC Consulting Ltd. Which, according to Energy Minister Brian Wilson which would "…. help the assessment of any future applications for coal investment aid, which will be evaluated on a case by case basis". Among the mines surveyed was Coalpower's Hatfield mine including the Thorne reserves. The report was published on 26 March 2003.

Bankability of the project, in the end, will not depend so much on long term electricity sales contracts as how competitive on the open market the products are. Hatfield is looking at an electricity cost of less than 3 p/kWh and a gas price of 25 p/therm for this first of a kind project. The electricity price may not match current trading market prices which may be as low as 1.5 p/kWh on some contracts, but in a years time this looks like being a very different picture. The syngas price promises to be cheaper than importing LPG at the rates now being proposed.

Financial close is expected by the end of the year for a project with a construction period of 24 months. A joint study with Kinder Morgan on piping away CO2 is being carried out. Offering a reduction in CO2 of 4 to 4.5 million "…this is the only way to get a real reduction in CO2 emission."

Energy White Paper Our energy future - creating a low carbon economy is the title of the much vaunted British Government white paper on energy policy published in February 2003. At last it seems to take the need for a strategically diverse mix of electricity generation seriously. In Chapter 6 it states, "Our preference is for a market framework with the right regulatory framework. But neither should we allow ourselves to become overly dependent on any one fuel source across the whole economy or in a specific we put forward in this paper will encourage the long term sector, such as electricity policies generation. It is our view that the development of new, more diverse and cleaner energy technologies that will promote both energy reliability and our low-carbon objectives." On Handling the carbon consequences of coal-fired generation it observes, "Even now coal generation provides around a third of the UK's power output. But in a low carbon economy the future for coal must lie in cleaner coal technologies - which can increase the efficiency of coal-fired power stations and thereby reduce the amount of carbon they produce - or carbon capture and storage." It is also notes that EU-wide carbon emissions trading will also make coal less attractive as a source of power." It should be fairly obvious that a fully implemented Hatfield Power Park project could make a mint out of carbon emissions trading without using any unproven technologies whilst yielding the UK with a significant boost to its balance-of-payments by the sale of CO2 credits to countries not meeting their Kyoto commitments. What does the white paper say about carbon capture and storage (CCS) and EOR? In paragraph 6.63 the commitment is made, "We will therefore set up an urgent detailed implementation plan with the developers, generators and the oil companies to establish what needs to be done to get a demonstration project off the ground. This study will reach conclusions within six months to enable firm decisions to be taken on applications for funding from international sources as soon as possible thereafter. This work will follow on from the initial work sponsored by the DTI." The Hatfield project, whose timescale seems to meet this schedule quite precisely, would appear to fit these objectives ideally.

System design

Three well proven Chevron - Texaco oxygen blown gasifiers - each rated at 50 per cent of full load -supply a single syngas train to processing fuel gas for either one GE 9FA gas turbine, or two Siemens V94.2k with off-board silo type combustors, coupled to a single steam turbine as in Figure 7. Similarly configured plants are now building up an impressive record of availability, reliability, hours on line, and load factors over 95 per cent at many sites all round the world.

The coal will be supplied from the Barnsley Main seam which is 2.8m thick. Quality specification will be to provide a consistent 24.5 gigajoule product at around 1.1 per cent sulphur. Key characteristics and analyses are listed in Table 1, ash composition in Table 2.

Many varieties of coal, pet coke and various mixtures were all tested in the demonstration Texaco Gasification power plant at Cool Water in California in the 1980's, in addition to the continuing test programme at Chevron Texaco's pilot rig at Montebello, to establish the operating characteristics.

While the implementation is not included in the initial project plans, both the gasification plant and power generation plant are designed to be built "CO2 removal ready" and hydrogen combustion capable with very simple adaptation.

Shift reaction

A key feature of the flow scheme is a water quench gasifier followed by a CO shift catalyst which converts carbon monoxide in the syngas to carbon dioxide by reaction with water - with the release of heat. For each molecule of carbon dioxide produced, there is a corresponding yield of one molecule of hydrogen.

CO + H₂O à CO₂ + H₂

The same flow scheme is used whether CO2 is being captured or not, and the degree of capture may be varied.

This quench gasifier arrangement has been in commercial operation in chemical plants throughout the world for more than 35 years. The Ube ammonia plant in Japan has been in operation since 1983 and the Farmlands ammonia plant in Coffeyville in Kansas was commissioned in 2000. Both use water quench gasifiers followed by shift reactors.

The shift added to the Hatfield scheme improves IGCC performance and greatly widens its flexibility and scope:

• As the carbon in the fuel is now present predominantly as CO2; this can be efficiently captured prior to combustion instead of from flue gas
• The CO shift catalyst also hydrolyses COS in the syngas and there is no need for a separate COS hydrolysis system
• The heat of the shift reaction supplements the waste heat of gasification and enables high pressure steam to be raised for feeding to the HRSG
• The shift lowers the water content of the saturated syngas leaving the quench gasifiers and enables the rest of the water to be easily removed by direct chilling with the process water makeup. Hence the syngas can be exported dry for use as a fuel for other combined cycles.

CO2 and sulphur compounds are absorbed from the syngas fuel using the proprietary Selexol process, licensed by UOP, and used on the Sarlux and API IGCC plants in addition to the Farmlands ammonia plant. Initially, the CO2 will be recycled to the syngas where it benefits the gas turbine combustion and power generating performance as in Figure 8.

The recovered sulphur compounds pass on to a Claus unit where they are reacted to yield a valuable by-product of pure sulphur. When the plant is adapted to run in CO2 capture mode, the CO2 will be replaced with compressed nitrogen from the ASU.

Hydrogen extraction

The system is designed for normal base load operation for optimal economy but such gasification plants are good for load following if necessary. In all modes of operation, it is it is possible to extract high purity hydrogen to contribute to the beginning of the Hydrogen Economy.

High purity hydrogen is already being extracted from commercially operating IGCC plants such as Pernis in the Netherlands, which produces more Hydrogen than power, Motiva in the USA, and at Sarlux in Sardinia. The Hatfield flow-scheme reduces marginal cost of extraction by providing a shifted syngas containing 60 per cent more hydrogen content than with current schemes.

Avoiding California

The U.K. open market electricity trading system regulation may have resulted in radically lower electricity prices for most consumers for a while, but it has done this at the expense of driving a great many generators to virtual bankruptcy to the point where there is little or no incentive for investment in new generation plant to replace the aging inefficient systems as well as many of the newer base load rated combined cycle plants. It has also succeeded in rendering many highly efficient CO2 reducing CHP plants uneconomic.

The fragility of the energy security status of the system in the event of a major fuel shortage or demand crisis is a cause for concern. The Chicago experience or the California syndrome is not too distant a prospect in the U.K.

The only parties to be makingadequate returns out of electricity in these times are the electricity suppliers, as ever. Large scale vertical integration from fuel supply to electricity distribution seems to be obligatory for generators to make a profit under the present regime.

The GEM system as proposed for Hatfield would restore a degree of flexibility to market by enabling the coal operator to shop around for a combined cycle power station to buy his fuel syngas. Hatfield could be a contributor to a BETTA system in addition to capturing CO2 and producing low cost hydrogen.

Wiseton Hall
Wiseton Nr Bawtry Doncaster DN10 5AE
South Yorkshire England
Tele: 44 1777 818200 Fax: 44 1777 818856

Our Men in Europe…

CoalPro Chairman elected Vice President of European Association

COALPRO Chairman, Nigel Yaxley is certainly going to be busy than he usually is (if that is possible!) during the next twelve months!

Holding its first General Assembly in Brussels earlier this year, Euracoal (the European Association for Coal and Lignite) founded in June 2002, appointed Nigel Vice President of the Association.

CoalPro is represented on the Executive Committee by Nigel, David Brewer and Brian Rostron. David also represents CoalPro on the Association's General Purposes Committee. Representating CoalPro on the Environment Committee is Brian Ricketts (CoalPro's Technical Manager).

The mission of the new association is to defend the joint interests of its Members at national and European level and to guarantee a positive position for coal in the enlarged EU.

Following a recent presentation given by Nigel Yaxley as Vice President of Euracoal to representatives of the European Commission's including Head of Unit - Coal & Oil (Mr V Luque Cabal), Head of Unit - Internal & External Security of Supply (Mr C Burgos), the Commissions representatives confirmed the need for coal in the enlarged EU and encouraged Euracoal to supply them with clear and convincing arguments to defend the position of European coal within the Commission.

Coal currently covers 29% of power generation in Europe and Euracoal will represent the coal producers and importers within the EU and the acceding Candidate Countries - ultimately becoming the voice of the whole European coal industry.

European Parliament pushes for tighter Environmental Regulation

EUROPEAN PARLIAMENT, in its first reading of the proposed Directive on environmental liability, has adopted a number of amendments opposed by industry and EU Member States. These include: extending the scope of the proposal, making environmental insurance compulsory, and deleting the permit and state of the art defences. If left unchanged, the text agreed by the Parliament will significantly increase business costs and cast doubt on the certainty of the current environmental regulatory permitting regime. The UK and a number of other EU Member States are opposed to compulsory financial provisions. The CBI will call on the Council of Ministers to adopt a more business friendly proposal at their meeting on 13th June. Once a common position is agreed between the Council and the Parliament, the proposal will go to a second reading, likely to be in Autumn 2003.

Council Decision - Coal and Steel Research Fund

The budget for coal research was fixed by the Commission at Euro 16.3m - which is less than under the ECSC regime. All current and new projects are managed financially and technically by DG RTD (Research and technological development), where a new Unit will be created for the management of both the coal and steel programmes.

Following a request by the Commission for nomination of candidates to the new Coal Advisory Group (CAG), the persons nominated by Germany, France, Belgium, Spain and the UK have mostly been selected. DG RTD have circulated a draft "Manual of proposal evaluation procedures" to CAG which will constitute the reference for project evaluation. The draft already indicates the strong role the Commission intends to play in the evaluation and selection of project, the CAG and CTG (Coal Technical Group) will only play a very restricted role. However, external experts will be involved in the evaluation of projects. The TRC will try to influence the decisions of industry and research institutions concerning nominations.

Energy Taxation

THE Ministers of Economy and Finance gave their political agreement to the proposed Directive on a frame work of energy taxation in Brussels in March this year.

The EU's Council of Ministers has been debating this energy tax since the Commission's proposal in 1997. The proposal aimed at improving the functioning of the Internal Market and at ensuring greater respect for the environment, while at the same time combating unemployment by allowing Member States to compensate increased revenues from energy taxation by lower taxation of labour. This Directive should help to meet the environmental objectives of the EU and the Kyoto Protocol, the definitive adoption of the Proposal must await an Opinion from the European Parliament.

In a first step, all energy products within the EU will be subject to a system of minimum taxation. At present, only mineral oils are subject to such taxation, which has not been revised since 1992. All those producing, including mineral oils, coal, gas and electricity will be taxed if used as motor fuel or heating fuel, but not when used as raw material or in chemical reductions. Certain industrial and commercial purposes will be taxed at a lower level.

Business use of energy products may be taxed at a lower rate than non-business use.

The Member States will also be allowed to apply exemptions or reductions where there will be no danger of internal market distortion and they will be free to apply different rates to the same production, provided that these rates be higher than the required minimum.

Member States may also choose to exempt (or reduce) renewable energy sources, bio fuels, energy products used in the field of pilot projects, the carriage of goods and passengers by rail and navigation on inland waterways. To respect the competitiveness of EU companies against companies from third countries, energy intensive industries might receive a tax reduction.

"The new standardised energy taxation will force several EU-countries like Austria, Belgium, Spain, Portugal and Greece to raise their taxes, but only after a transitional period of six years. For other countries such as Germany, where the taxes compared to other countries are relatively high, there will be no great change" said EU-Internal Market Commissioner Frits Bolkenstein.

Nevertheless, the coal industry is against the introduction of this energy tax and considers that it will have a negative impact on the competitiveness of coal inside and outside the EU and 2004 as under the previous ECSC regime, two co-ordination meetings will be organised in Nottingham and in Essen.

A new mining-related integrated project has been submitted for a Commission pre-check in co-operation with Euromines and a large number of partners. It will be submitted in the field of "Intelligent production" under the title "Mining industry solutions to reinforce Europe's sustainable society" (MISTRESS).

Liberalisation of the Internal Electricity and Gas Market

ACCORDING to a Proposal of the European Parliament and the Council of 13th March 2001 amending Directive 96/92/EG and 98/30/EG concerning common rules for the internal energy market, a new Directive is now in preparation.

The proposal is a follow-up to the Commission's Communication to complete the internal energy market. It contains two major objectives - one which aims at progressively freeing all electricity and gas consumers to choose their supplier to ensure that they benefit from the advantages of the opening of the market in order to guarantee competition and a level playing field between Member States, and one that aims at improving the structural aspects of the Community market and the equal access to the market by everybody. The Proposal was adopted by written procedure and will now be presented to the Parliament for a second reading.

The Proposal foresees the opening of the non-residential market by 01st July 2004 and by 01st July 2007 for all users within the EU and defines the requirements and rights.

In a first step the activities of distribution and transmission of electricity and gas must be separated. A non-discriminatory access to the network is essential for the development of effective competition. The Member States should establish independent regulatory authorities competent to set and/or approve tariffs and conditions for access to gas and electricity transmission and distribution networks.

The liberalisation process which started in 1996 has, to date, been finalised in Germany, UK and Scandinavia. Other countries such as France have liberalised only 30% of their electricity and gas market.

With this process, the EU is on the way to creating the world's biggest internal electricity and gas market, without being able to provide the necessary security of energy supply. This represents a sore point in the European energy policy as the European Union will depend for 70% of its energy requirement on imported energy by 2030. However, the creation of a functioning internal market is only possible if the rules of the security of energy supply are respected. The EU will have to review its energy strategy for the future, when coal could play an important role.

News in brief…

Alkane Energy, Britain's leading commercial producer of power from coal mine methane, is halving its UK workforce as a result of continuing low electricity prices in the UK, and is now focusing on development opportunities in Germany.

The government's rescue package for British Energy, the stricken nuclear operator, is being challenged in the European Court.

A decision on whether the coal-fired Drax power station will be allowed to burn pet-coke, a residue from refining oil, is expected later this month. Environment Minister Michael Meacher told the House of Commons in March that it was "perverse" that there had been an increase in coal burn at power station without flue gas desulphurisation and a decrease at installations with it, as was the case at Drax.