Michael Harrison's Outlook: Coal begins to make its comeback from the bottom of a dark and very deep pit

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The Independent Online

Forget about the nuclear renaissance. Old King Coal is back. Drax, Europe's biggest coal-fired station, has just floated on the stock market, International Power is extending the life of its one UK coal plant and now E.ON of Germany has unveiled plans to build the first new coal-fired station in Britain for 30 years.

Coal was supposed to be the forgotten fuel, the dirty man of Europe, fit only for meeting the electricity needs of the developing world, where the stuff is plentiful and economic self-improvement still takes precedence over the trashing of the environment.

In fact, the picture is nowhere near that straightforward. Coal still accounts for 40 per cent of the UK's electricity generating capacity and the proportion of the country's energy needs being met by coal is actually rising. That is one of the reasons why our carbon dioxide emissions are going up and not down and why Britain is currently missing its global warming targets by a country mile.

Coal is cheap and in abundant supply compared with gas and the stations which run on it have long since paid for themselves. So, in the short-term at least, making maximum use of coal-fired capacity is a no-brainer.

That will not always be the case. The new generation of coal-fired plants being studied by E.ON will be far more expensive than their predecessors, new gas-fired stations and even onshore wind farms. The 450-megawatt station the company is thinking of building - probably at Killingholme near to the east coast - would cost £550m. It will have to be built with "carbon capture" in mind. That means either using oxyfuel technology - burning the coal in pure oxygen so it produces virtually no sulphur - and then pumping the CO2 into nearby North Sea gas reservoirs. Or it means fitting costly scrubbing equipment to the station to remove both the sulphur and the carbon.

In order to make such clean coal plants a reality, the Government will have to put its hand in its pocket - either to provide capital grants or to devise a mechanism allowing generators to sell this carbon-free electricity at a premium. In other words, something akin to the renewables obligation which underpins green energy and the levy which will be needed to make a new generation of nuclear reactors financially viable.

Where there is a will, there is often a way, however, so all the talk about clean coal electricity generation might be about to become a reality. The only shame is that a decade after Old King Coal himself, Richard Budge, began banging the drum for the technology as a way of keeping the pits open, both the fuel and the expertise will come from abroad.

Jaguar lives to fight another day

The blue oval has taken a fearful battering of late but Ford still shows a bulldog determination to stand by its very own English patient, Jaguar. In addition to the billions poured into the West Midlands since Detroit had a rush of blood to the head and paid £1.6bn for Jaguar in 1989, another £1.2bn of capital has just been injected.

Without the regular transfusions, Jaguar would have gone bust a long time ago, a victim of indifferent quality, ferocious competition in the premium car market and a dollar exchange rate which makes it painfully difficult for the company to make money in its most important market, the US.

Last year the loss was £430m and this year sales will slip below the 100,000 mark - a far cry from the 250,000 Jags Ford dreamed of selling when it was still in the first flush of excitement at its purchase of the brand.

The billions of pounds of Ford money soaked up in the West Midlands puts the investment which BMW wasted on Rover into perspective. But unlike the Germans, Ford shows no sign of cutting and running. Indeed, in addition to the latest bail-out for Jaguar, it has also recently given a further reprieve to Land-Rover, which Ford picked up from BMW as it was heading back to Munich with its tail between it legs.

Unlike the dog that BMW acquired in Rover, Ford at least possesses brands with mileage in them and a couple of iconic models in the shape of the Range Rover and XK sports coupé. It has also bitten the bullet on capacity, closing down one of Jaguar's three production plants (a remarkable number for a company selling fewer than 100,000 cars a year) and also build quality, giving Land-Rover a clear road-map to improve its poor reliability.

But the supposed benefits of putting a collection of luxury brands together in the form of Ford's Premier Automotive Group have never come through. The only successful marque in the entire stable has been Volvo but, even there, performance is on the wane. PAG has switched drivers a few times and strategy has chopped and changed along with the movements of personnel. But the ultimate destination is no clearer.

Contrast that with how BMW has exploited the premium brands it has hung on to in the UK - Mini and Rolls-Royce. There may be fewer rollers leaving Goodwood than originally planned but the Mini is the UK automotive success story of the decade.

Faced with his king-sized headaches at home, the travails of Jaguar probably seem a minor distraction by comparison to Bill Ford. For now he has bigger fish to fry, which is probably just as well for Jaguar.

Prescott lacking a ports policy

It was the sort of news that ministers like to slip out late in the day in the week before Christmas, hoping, in the time-honoured phrase, to bury it. Just after 5pm on Wednesday, John Prescott's Office of the Deputy Prime Minister announced that he was minded to approve the Bathside Bay port development in Essex.

The proposed port is opposed by no fewer than 11 lobby groups and interested parties including the Environment Agency and the Highways Agency. The Bay forms part of the Stour estuary site of special scientific interest and is regarded as an area of international importance for nine species of bird.

But it is not just the wildlife whose peace will be shattered by the building of the second largest container terminal in Britain. The development will generate up to 4,000 extra vehicle movements per day as HGVs trundle in and out of the port.

As an example of how capricious the Government's policy on port development is, a similar application to build a container terminal in Dibden Bay near Southampton was turned down earlier this year by Mr Prescott.

But you do not need to be a twitcher to wonder at the decision-making processes in his department. An awful lot of the goods shipped in through Bathside Bay will be destined for the North, meaning millions of extra "food miles" a year, more road congestion and increased pollution.

The UK needs a national ports strategy linked to a national transport and environmental strategy but the ODPM is not providing it. PD Ports thinks its proposed "Northern Gateway" ticks all three boxes. The deep-sea container terminal would be sited on brownfield land at Teesport, it would be a lot closer to its markets than Bathside Bay and it would take an estimated one million containers off the roads of southern England. It also has more local support than Bathside. A winning combination? Only Mr Prescott can answer that.