Coal mining in one of the four open cast coal mines of Kolumbara, Serbia photo: Bankwatch. Myths and Facts: Europe & coal

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1 Coal mining in one of the four open cast coal mines of Kolumbara, Serbia photo: Bankwatch Myths and Facts: Europe & coal

2 The industrial revolution in Europe began two hundred years ago and was fueled by coal. Visions of a foggy, smoggy polluted London of the nineteenth century are gone, but coal is still perceived as the resource that can kick start development and ensure energy independence. This perception is based on the fact that this industrial scenario succeeded during a time of an abundance of easy coal, and no one since has tried to see whether a different formula can actually work. coal smoke Source: slightly adapted from The unpaid health bill How coal power plants make you sick by HEAL p13

3 dirty coal Coal is the most climate-damaging of fossil fuels because coal is almost pure carbon, while other fossil fuels like oil and gas contain both carbon and hydrogen. Coal is 40 per cent more harmful to the atmosphere than natural gas. In addition to its effects on climate, coal presents a serious problem to human health, as it releases many harmful substances when burned including mercury, sulphur dioxides and nitrogen oxide. These compounds can cause acid rain and heavy respiratory diseases or accumulate in the body, leading to long-term health effects. Mercury is from now on regulated by the new European directive called Industrial Emissions Directive (IED). expensive coal Any measure aiming to make coal cleaner necessarily requires costly investments and higher energy prices for consumers. While releasing less pollutants decreases the risks to our health and the environmental, the production of energy from coal is still expensive and is not competitive with renewable energy and energy efficiency measures because of the additional investments in the coal plants. The affects of pollution on economic activities are known as externalities. In the case of coal, this means through increased bills for health care and environmental degradation. When these externalities are internalised that is by making the person responsible for the pollution bear the costs, this increases the price of the production. Some of coal s pollutants can be mitigated to an extent with the installation of dissulphurisation equipment for the suplphur dioxide for example. ignite fired power plant photo Bankwatch

4 Extraction Coal needs to be mined, using water and leading to waste. Coal is most-frequently mined in open pits, leading to environmental degradation. Coal mining is a dirty business, and workers who mine it often suffer industrial diseases and are forced to retire at much younger ages. Coal power plants require water to cool power plants and to keep coal ash from dispersing into the air as fine particles. Using water for such purposes competes with activities like farming and can threaten the food sovereignty of regions that are susceptible to droughts. Thousands of hectares of land are required to landfill ash from a single coal power plant both mining and the thermal power plant waste management require thousands of hectares (often arable) land. Ash clean up from coal fired power plant photo: Southern Studies

5 Electricity A conventional coal plant burns coal to produce electricity. Only about one third of the energy from burning turns into electricity, as the other two thirds are emitted into the atmosphere in the form of steam. Coal power plants are usually huge so they have no market for this heat e.g. to use it into a district heating network of a neighbouring city or town. Because coal plants are usually built away from the point of consumption, the losses of electricity when transmitted through the grid are further aggravated. In some countries like Bulgaria, these losses can reach up to 50 percent. This is why it is considered inefficient to heat homes with electricity when coal is burned, only a very small portion turns into electricity. Then transportation over the grid leads to additional huge losses. Just like nuclear power plants, coal power plants are used as base load energy sources, providing a continually supply of power. These plants are not flexible and operate 24 hours a day. This is problematic because coal plants cannot be shut down if there is no demand. Base load plants also have a crowd-out effect, meaning that where coal and nuclear is in use, no cleaner alternatives can be built without competing with the base load. Coal power also leads to the lock-in effect. Once a new coal power plant is built, it is there to stay for 40 to 60 years in place of cleaner alternatives. If we want to achieve a safe climate scenario in the future, no new coal plants should be built in place of old ones. clean coal? there is no such thing No less problematic for many parts of Europe and Russia is the use of coal as a direct source for heating households. Burning coal in old and inefficient stoves is a practice that releases emissions harmful to human health right in the residential areas. In many parts of Eastern Europe, this is commonplace, and in the winter the smell of sulphur and suffocating smog is everywhere. People are unaware of the consequences of such practices, and because of energy poverty, people are forced to use the cheapest available heating source. This situation has led increasingly to energy efficiency measures and cleaner heating sources including biomass from wood, straw and reed briquettes or pellets burned in efficient modern stoves.

6 In attempts to green the image of coal, carbon capture and storage (CCS) is being advanced as a clean version of coal. The idea behind CCS is to store carbon dioxide from coal power plants deep underground in geological formations which are supposed to keep it there safely buried for a very long time. Such solutions however are very expensive and would lead to percent increases in the price of electricity. Moreover, the technology is at least years away from commercial service and thus cannot be a justification for building new coal plants. photo: Carles Cerulla Public Banks The European Investment Bank and the European Bank for Reconstruction and Development, as Europe s public banks, are still financing coal projects despite their commitment to European climate objectives. Some commercial banks have labeled coal too risky, expensive and uncompetitive, providing enough reason for public banks to steer clear. Additionally the EU s Structural and Cohesion funds do not support directly coal. Yet there remain a number of ways that the EU still supports coal, including through initiatives like the Emissions Trading System. Like other large forms of conventional energy generation, coal projects are also a breeding ground for corruption. In big projects cash flows are easily redirected and many tricks ensure that money enters private pockets at the public expense. One recent example is the Sostajn power plant in Slovenia, where ongoing corruption allegations have not deterred the EIB from disbursing hundred of millions of euros for the project. costs and subsidies Coal power plants may seem cheaper to construct when compared to renewables, but coal plants require fuel to burn and because of the very high temperatures in the burning chambers they require expensive and frequent maintenance the yearly costs to maintain a coal power plant may be as high as 10% of the initial investment to build the plant. With the closure of nuclear plants across Europe, coal power is poised for resurgence. Yet the choice between nuclear and coal energy ignores the promise of energy efficiency measures and renewable energy sources. To this end, subsidies for fossil fuels should be phased out to level the investment playing field. In 2011 USD 775 billion in subsidisies went to fossil fuels like coal, while just USD 66 billion were given to renewable energy sources. Ending subsidies for fossil fuels is the first and most necessary step to be made towards the low-carbon future.

7 Further reading Carbon rising, CEE Bankwatch Network EBRD and EIB stop financing coal, CEE Bankwatch Network Coal s unpaid health bill, HEAL projects/unpaid-health-bill Phasing out fossil fuel subsidies must be one of the major outcomes of Rio+20, NRDC jschmidt/phasing-out_fossil_fuel_subsid. html Art installation in front of the European Commission s Berlaymont building denouncing the financing of the Sostanj lignite fired power plant in Slovenia photo: Counter Balance

8 Burning coal is an inefficient way to generate electricity photo: Bankwatch This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of Counter Balance and can under no circumstances be regarded as reflecting the position of the European Union.