No taking cheap Colombian coal to Newcastle
THE BRITISH government is finding it easier to preach than practice. After lecturing developing countries in Rio on the importance of controlling global warming, it has now been forced by a nationwide protest to rescind its decision to close British Coal's 31 pits and lay off three-fifths -- some 30,000 people -- of its workforce. Instead, it has bought time by calling for a review of the country's energy policy.
Firm believers in the economics of a free marketplace, Britain is discovering that in the marketplace, foreign coal is cheaper and prices are dictated by large coal producers such as the US, Australia and Colombia. British coal imports have steadily risen from nil in the early 1970s to 20 million tonnes a year now. The state-owned coal company, British Coal, gets a huge government subsidy -- about UK L 100 million a month -- but is still uncompetitive.
To add to its woes, British Coal is under enormous pressure from natural gas, triggered by the discovery in the North Sea of reservoirs large enough to last at least 50 years. Gas is cleaner, easier to transport and converts more efficiently into electricity and gas power stations are cheaper and quicker to build.
A Department of Trade and Industry study claims the share of nuclear power will drop from 20 per cent in 1990 to 1 per cent by 2020, and that of coal will drop from 68 per cent to 27 per cent over the same period. On the other hand, the share of gas will increase from nil in 1990 to 57 per cent in 2020. The decline in coal use will mean sharp cuts in pits and jobs. A House of Commons trade and industry committee inquiry reveals as few as 10 deep mines will remain after 1994. As many as 17 coal-fired power stations and 7,000 jobs could be axed in the next three years, according to press reports.
The threat of unemployment has led to a nationwide debate on what is best for Britain. The "dash for gas" is being described as "the economics of the madhouse". On October 25, at least 100,000 people, including thousands of miners, marched through London in protest against closure of the pits. Through the Campaign for Fair Electricity Regulation, the unions and the Coalfields Communities Campaign have lodged a case in the High Court.
Industry trade secretary Michael Heseltine claims the closure of coal mines will reduce electricity bills by UK L 300 million. But British Coal marketing director Andrew Horsler argues gas-fired stations will instead increase electricity bills because they will replace coal stations whose costs have been completely written off and can therefore produce cheap electricity. Power generators back Heseltine's argument and insist coal-powered fire stations are near the end of their usefulness, and besides, the environmental costs of coal-generated power are not being considered. Technology to burn coal more cleanly is expensive and reduces the fuel's efficiency.
With Britain facing a recession and a major business survey recording the fall of most indicators of economic health in the past three months, the government's offer of redundancy payments and measures to help the affected areas worth UK L 1 billion has done little to either build up public confidence or offset the political damage to the country's ruling party.
The British are also debating the virtues of energy self-reliance. It is estimated at least 80 per cent of the country's energy consumption will soon be met by imports. And less than 10 per cent of gas-fired power will come from British gas sources. The rest will come through a European network fed by Algeria, Russia and Norway.
The proposed coal pits closure has also brought economic nationalism to the fore. "I am not in favour of free markets if it means importing cheap foreign coal from Columbia," said a Conservative Party member on radio.