Can coal’s time come again?

Times gone by: this rare print of W Eugene Smith's classic Magnum image of Three Generations of Welsh Miners was recently purchased by the National Museum of Wales

ANY Welsh entrepreneur or business owner watching Bloomberg on an otherwise unremarkable morning last week may have found plenty in one of its reports to trouble them.

In a regular feature, the channel visits countries around the globe in order to present a five-minute snapshot of the local economy. Last week it was Estonia. Like other nations, the Baltic state received its fair share of recession buffeting. But it wasn’t the speed of its recovery that would have given cause for concern.

Instead, in perhaps 20 seconds, the scale of the problems facing the Welsh economy became immediately apparent. The presenter was guided around an engineering plant of close to aerospace standard. The company is doing well and orders are coming in. And it is paying around a third less for labour costs.

This average, when presented so simply (and so starkly), cannot be answered competitively by businesses here in Wales and other Western economies. Indeed, Labour leadership contender Ed Miliband is currently campaigning for a living wage of at least £7 an hour, going some way beyond the current minimum wage.

A rising cost of living and globalised supply chains will not allow for manufacturing businesses here to reduce wage levels to those of developing nations in order to compete (and, of course, there is no guarantee that companies in those countries would not reduce wages further in order to overcome such a challenge). So it falls to businesses and the economic development strategy to innovate.

Wales is already attempting this, in seeking to play a major role in developing renewable technologies. But it is also worth looking back over the shoulder, to re-evaluate the conditions that allowed Wales to lead the world in the past, in order to judge whether it would benefit the country in the future.

According to the National Union of Mineworkers – and Tyrone O’Sullivan, Welsh mining’s leading light – there remains around 250 million tonnes of workable coal reserves in the South Wales anthracite district. However, any extraction in the old coalfield faces a number of significant challenges. While the anthracite (and other types) is of a high quality, it is often found in small pockets, and beyond sometimes impenetrable rock shelves. During South Wales coal’s heyday at the turn of the 20th Century, smaller scale collieries were developed to suit to the field’s geology.

However, this fragile economic balance was undone following the Great War, first through over-capitalisation of the industry by competing combines in the 1920s, and then accelerated by nationalisation. Plaid Cymru calls for Wales to be considered separately in this were opposed by the NUM and brushed aside by the Labour Government. But the immediate impact of grouping South Wales into the South-Western Division became apparent in the National Coal Board’s annual figures for 1946 and 1947. While qualifying some of the problems besetting production in the district, its conclusion – that the field was operating at a loss – wavered the wills of politicians and heralded the start of the pit closure programmes.

The reports had referenced the difficult geological conditions found in South Wales. However, they failed to take account of under-investment in the mines and a complete breakdown in staff relations (both consequences of the competition between mining companies in the 1920s) and the change in financial priorities for the pits that nationalisation brought.

A private operator no longer faces those problems. However, the size of the seam may not justify the huge cost of exploration (Tower Colliery would not sink a second mineshaft in order to extend the pit’s lifespan because it would have meant spending around £50 million), even if NCB surveys for the South Wales anthracite district are considered comprehensive. And, against a backdrop of growing worldwide concern over the burning of fossil fuels, opencast pits in Wales have proved almost universally unpopular with the communities in which they are situated. The climate in which they operate has become tougher, too, with the Margam extension rejected this month in the High Court, despite a concerted campaign by Celtic Energy to see it approved.

So is that the end for Wales’s relationship with its coal? Will we continue extraction in a limited way, such as the Unity drift mine at Cwmgwrach, in the Vale of Neath, which has a production target of 1m tonnes a year for the next 25 years? Or at the nearby Aberpergwm colliery, just outside Glyn-Neath, where the AIM-listed Energybuild has been re-establishing the mine that was opened by British Coal during the 1970s and closed in the 1980s? And should whatever remains be left just where it is?

However, the advent of new technologies aimed at reducing carbon emissions may – just may – allow the Welsh economy to take advantage of its coal once again without having to dig it out of the ground. The SEREN research project, located in the Geoenvironmental Research Centre at Cardiff University aims to: “Deliver new and innovative ground engineering technologies that will address the low carbon agenda. These technologies will be showcased and promoted globally with a view to encouraging organisations with low carbon initiatives to move to Wales.”

It will focus on four areas – ground source heat energy, underground coal gasification, carbon sequestration and low carbon applications for geoinformatic packages. It is appointing two PHD studentships to look into carbon sequestration in coal. Here, the work will include experimenting in the ability of different materials in coal seams to absorb and store CO₂, investigating the processes that allow the absorption of carbon dioxide, and how much CO₂ could be stored in seams. it will use the South Wales coal basin as a case study and take on previous research that developed out of the oil industry.

The new Westminster Government has already announced its intention to continue with the last administration’s plans for a four demonstration projects for carbon capture and storage – the sequestration process by which carbon dioxide is removed from the emission of powers stations or large industrial facilities and transported via pipelines to geological storage sites such as depleted oil and gas fields.

Although these projects will most likely focus on post-combustion technology in coal fired power stations, there is also official interest in storing CO₂ in exhausted oil reservoirs in the North Sea, although both BP and Shell have withdrawn their wells from this proposal. RWE npower also announced late last year that it had reached an agreement with Cansolv technologies to install carbon CCS technology at its Aberthaw power station, subject to planning permission. In addition, Scotland is also talking up rock beds beneath the Moray Firth. However, a major problem in transporting carbon to the middle of the North Sea is that it rather negates the intention of reducing emissions in the first place, and this has provided something of a spur to the SEREN project.

However, the project’s leaders have gone to some length to stress that its remains in its very early stages and that no applications for licences required for exploration have been made. Their caution is perhaps understandable. In fact, no sites have even been surveyed yet, although a rigorous evaluation of suitable criteria is now emerging, as concerns over potential leakage remain a priority.

The Carbon Capture and Storage Association has said that any site will need to demonstrate a large capacity for storage and show that it is geologically suitable, with an impervious shelf situated above the porous rock into which the carbon will be injected, to prevent any upward migration of CO₂. It wants storage to take place below 800 metres, and believes depleted oil and gas reservoirs will be used more frequently in early projects, as extensive geological and hydrodynamic assessments will already have been made for them. The SEREN project has said that it will only consider previously unused coal deposits in South Wales – provided they are at distance from housing and other settlements.

But research is progressing. Earlier this year, Deputy First Minister Ieuan Wyn Jones agreed with a recommendation to purchase geological data relating to CCS potential in the South Wales coalfields. And while the SEREN project has said that it aims to ensure that industries in Wales have the necessary facilities in future to capture their carbon so that they are not persuaded to move to other areas of the UK where storage facilities are likely become available in future – something that echoed in the Minister’s statement – there is another way of looking at this.

If business in the UK, Europe and even the rest of the world is to face ever-tighter legislation on emissions, and if SEREN’s work is ultimately successful in proving that the South Wales coalfield can adequately dispose of carbon dioxide, then the country could find itself once again sitting on top of a huge economic opportunity.

For, just as the world’s first globalised industry was created in Swansea’s copperworks, because it was economically sensible to transport the ore to where the coal was mined because more coal than metal is required in the production of copper, then there is the possibility that businesses faced with rising emissions costs would choose to move closer to where it is disposed of in order to make savings.

Of course, there are a thousands variables here. There would be competing coalfields across the world, labour costs would have to be weighed against savings on emissions, renewables may present a better power alternative to business, and if only anthracite lay in uniform, easily plotted deposits. But there is a possibility there and, in a world of slim economic pickings, it is at least worth the investigation.