The new black gold

A sign of things to come?

In both Hungary and Austria a mutual demonstration was held last week to protest against plans for a lignite mine near the border of the two countries. A Hungarian company, Nogradszen Kft., is looking to exploit the site which lies just west of the Hungarian town of Szombathely. In Szombathely, a petition of thirty thousand signatures was collected in just under three weeks. Fears are that the mine will affect the health of residents and have a negative impact on the environment of the surrounding area.

It has been over fifty years since a mine operated in the region, at Torony on the Hungarian side of the border. But now, along a 45 hectare strip along the edge of the Orseg national park, Nogradszen wants to not only once again open up the area to mining, but has plans to build a coal-fired power plant as well.

Some protesters vowed that they would resort to acts of civil disobedience if necessary in order to prevent the mine from opening and the plant from being built. Even the premier of Burgenland, Hans Niessl, opposes the plan; he feels coal-fired power plants should be a thing of the past. He went so far as to write an official letter to the Hungarian prime minister, Peter Medgyessy, stating his views. Meanwhile, within the Hungarian government itself there are opponents to the mine and power plant, including Miklos Persanyi, the environment minister.

The beleaguered company has been besieged on all sides. They haven’t even been able to drill test holes at the proposed site because the regional authorities refused to grant a permit. Still, Nogradszen refuses to back down. The company has already initiated court proceedings, and a decision is expected sometime in September.

Oszkar Nagy, the head of Nogradszen, maintains that the power plant and mine both adhere to EU norms. He adds that in some cases, as in Stockholm, such power plants can be found within the vicinity of big cities.

Given the size of the protest and the fact that leading politicians from both Austria and Hungary oppose the mine and power plant, it would seem that Nogradszen doesn’t stand much of a chance. Yet such a conclusion would be premature and ignores the realities of our brave new globalised world, one in where governments don’t wield power but simply exist to enforce the whims and wishes of an economic elite. What is more, Nogradszen has one important ally: some Eurocrats from within the EU itself.

If you think that all Eurocrats would be opposed to coal mining then think again. Some in Brussels look to coal as a new black gold. Although coal’s pubic image reeks of industrial ugliness and broken mining communities, advocates contend that it still provides more than a third of the world’s electricity, and in a few years time, when the gas runs out, it will come back into its own. In other words, behind the old-fashioned and dirty facade hides what some envision as the clean fuel of the 21st century.

Black is Beautiful

Those who see a future in coal are betting on technology to turn what was once considered bad and black into something black and beautiful. They argue that with modern combustion technology coal is a clean fuel, albeit it produces a worrying amount of carbon dioxide.

Like conventional flue-gas scrubbing systems, "clean combustion" technologies such as integrated gasification coribined-cycle (lGCC) and prerised fluidised-bed combustion (PFBC) reduce pollution by sulphur dioxide and ash. But IGCC goes further: by raising overall cycle efficiencies to 50% or more — comparable with modern combined cycle gas power stations — it narrows the gap between coal and gas in terms of carbon dioxide emissions.

Ironically, those advocating a return to coal feel constraints similar to those of renewable energy, in that present "deregulated" markets are distorted in favor of oil and gas. As one analyst put it, "in some countries the effect is argued to be greater regulation coupled with greater volatility in energy supply and prices."

As a result, hindered by government reluctance to invest in coal research, coal advocates lament that IGCC technology has taken a long time to develop and is still not commercially mature. It is also likely to remain more expensive than conventional combustion systems unless governments realize the importance of diversity in energy sources.

In the newly-deregulated electricity markets of the 1990s, coal lost out to gas in a big way. A prime example is the UK, a former large coal producer and a pioneer of deregulation. The British government estimates that gas could account for 75% of its electricity generation by 2020, and that 55-90% of this gas would have to be imported as UK reserves are used up.

Many believe that the European coal industry is on borrowed time. The cost of producing coal in Europe is now three to four times as much as the international market price. It is far cheaper to buy coal from South Africa or Colombia and ship it around the world than dig it out of the ground at home.

Only four countries in the EU now produce significant amounts of coal: Germany (52 million tonnes in 1997), the UK (48 million tonnes), Spain (18 million tonnes), and France (7 million tonnes). At a time when electricity demand is growing at around 3% annually, European coal production — and mining jobs — are shrinking at a similar rate.

Recent political events, however, may just lead to the kind of realignment that some are hoping for. With foreign supplies of gas and oil not as secure as they once were, some policymakers are beginning to look to coal as a possible alternative. Unlike oil, coal is more widely distributed across the globe and within Europe. There are large reserves for the future, the international market is transparent and competitive, and prices are quite stable when compared to oil and gas.

The importance of the showdown in Hungary with Nogradszen, therefore, is one that extends far beyond the border area of two tiny countries within Central Europe. Not only will it reveal how effective the mechanisms of globalisation are in terms of big business riding roughshod over civil society (thereby revealing the impotence of government within this framework), but it will also give an indication of whether a fundamental shift has begun in the energy policy of the EU. If so, we can expect to see a scramble for mines that were once abandoned as no longer profitable nor worthwhile from both an economic and environmental standpoint, but which have since become the focus of a new gold rush.

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